This lump sum discount rate calculator works out the discount rate it takes to grow a lump sum from its present value to a future value in a given amount of time.
Specifically the lump sum discount rate calculator, calculates the discount rate (i) required, for a lump sum to be compounded from its present value (PV) to its future value (FV) in a given number of periods (n).
Lump Sum Discount Rate Calculator Formula
The calculator uses the lump sum discount rate formula as shown below:
i = (FV / PV)(1 / n) - 1
Additionally full details of the formula can be seen at our lump sum discount rate formula page.
Instructions
The Excel lump sum discount rate calculator is available for download below,. The calculator is used to compute the discount rate by entering details relating to the present value, future value, and the number of periods.
Accordingly the calculator is used as follows.
Step 1
Firstly enter the future value (FV). The future value is the value of the lump sum required at the end of period n.
Step 2
Secondly enter the number of periods (n). The number of periods is entered. A period can be any term (month, year etc), but must be consistent with required discount rate. For example, if the yearly discount rate is required then the periods must be in years.
Step 3
Next enter the present value (PV). The present value is the value of the lump sum at the beginning of period 1 (today).
Step 4
Finally the lump sum discount rate calculator works out the discount rate (i). The answer is the discount rate it takes to compound the lump sum from its present value (PV), to its future value (FV) over the number of periods (n).
Lump Sum Discount Rate calculator Download
The lump sum discount rate calculator spreadsheet is available for download in Excel format by following the link below.
The lump sum discount rate calculator is one type of tvm calculator used in time value of money calculations, discover another at the links below.
Users use this discount rate calculator at their own risk. We make no warranty or representation as to its accuracy. Additionally we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of a present value calculator that you might use when considering how to calculate the discount rate. It is purely illustrative of a present value discount rate calculator. This is not intended to reflect general standards or targets for any particular business, company or sector. If you do spot a mistake in this calculator, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.