Anupama Abhijit Pathak (Student) (49 Points)
22 March 2011can any one help me ? ? ??
How to calculate discounting factor on calculator while solving capital budgeting problem.
Devendra
(Chartered Accountant)
(4775 Points)
Replied 22 March 2011
1) The formula for discounting rate is 1/(1+r/100), where r = rate of interest
2)For Eg : If the discounting rate is 10%, then discounting factor
for 1st year = 1/(1+10/100) = 0.9091
Simply speaking calculate 1/1.1 = 0.9091 on the calculator, then again press '=' on the calculator then you will get the discounting factor for the 2nd year = 0.8264, then agian press '=' sign and you will get discounting factor for the 3rd year 0.7513 and so on.
Regards,
Devendra
CAclubindia
