# Discount Rate Calculator

URL: https://speedycalculator.com/calculators/finance/discount-rate/
Last updated: 2026-10-25

> The discount rate calculator finds the annual rate that links a present value to a future value over a term – with optional regular cash flows at the start or end of each period – and the periodic rate.

## Inputs

- Present value
- Future value
- Term (years, months)
- Periodic cash flow (deposit)
- Cash flow frequency
- Cash flow timing
- Compounding frequency

## Results

- Periodic discount rate
- Effective annual rate
- Discount rate (nominal, with chosen compounding)
- Total cash flows

## Formula

```
Without cash flows: r = (FV ÷ PV)^(1 ÷ n) − 1
With cash flows: solve PV × (1 + i)^N + CF × [(1 + i)^N − 1] ÷ i × (1 + i × timing) = FV for i
```

## Explanation

The discount rate is the return that makes money today equivalent to money later. Investors use it to value future cash; savers can use it to see what rate turns their deposits into a target.

### How to use the Discount Rate Calculator

- **Present value**
- **Future value**
- **Term**
- **Periodic cash flow (deposit)**
- **Cash flow frequency**
- **Cash flow timing**
- **Compounding frequency**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the present value, future value, term, compounding and any regular cash flow with its frequency and timing.

### Tips

- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.

### Common mistakes to avoid

- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).

### Inputs explained

FieldWhat to enterPresent valueAmount in your currencyFuture valueAmount in your currencyTermUnits: years, monthsPeriodic cash flow (deposit)Amount in your currencyCash flow frequencyChoose one: Monthly, Bi-weekly, Weekly, Quarterly …Cash flow timingChoose one: End of each period, Beginning of each periodCompounding frequencyChoose one: Yearly, Semi-annually, Quarterly, Monthly …

### What each result means

- **Periodic discount rate** = rate(round([Term]×[Cash flow frequency]), 0 - [Periodic cash flow (deposit)], 0 - [Present value], [Future value], [Cash flow timing])×100
- **Effective annual rate** = ((1 + [Periodic discount rate]÷100)^[Cash flow frequency] - 1)×100
- **Discount rate (nominal, with chosen compounding)** = nomr([Effective annual rate]÷100, [Compounding frequency])×100
- **Total cash flows** = [Periodic cash flow (deposit)]×round([Term]×[Cash flow frequency])

### Example values

How the main result changes when **Present value** changes and everything else stays at the example values above:

Present valueDiscount rate (nominal, with chosen compounding) (%)5,00018.9217,50013.04410,0009.05112,5006.05115,0003.66120,000-1.000e-8

## Worked example

Inputs — Present value: $10,000; Future value: $20,000; Term: 8 years; Periodic cash flow (deposit): $0; Cash flow frequency: Yearly; Cash flow timing: End of each period; Compounding frequency: Yearly.

Results — Periodic discount rate = 9.0508 %; Effective annual rate = 9.051 %; **Discount rate (nominal, with chosen compounding) = 9.051 %**; Total cash flows = $0.00.

## FAQ

**What is a discount rate?**
The rate used to convert future money into today's value.

**How do I choose a discount rate for an investment?**
Use your required return or cost of capital.

**Is the discount rate the same as the interest rate?**
Mathematically similar; the discount rate is applied backwards in time.

**What formula does the Discount Rate Calculator use?**
Without cash flows: r = (FV ÷ PV)^(1 ÷ n) − 1.


## Sources

- [Corporate Finance Institute – financial ratios](https://corporatefinanceinstitute.com/)