# Lump Sum Discount Rate Calculator

## What does it do?

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.

More precisely, 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).

## Formula

The calculator uses the lump sum discount rate formula as shown below:

```i = (FV / PV)(1 / n) - 1
```

Full details of the formula can be seen at our lump sum discount rate formula page.

## Instructions

The Excel lump sum discount rate calculator, available for download below, is used to compute the discount rate by entering details relating to the present value, future value, and the number of periods. The calculator is used as follows: ### Step 1

Enter the future value (FV). The future value is the value of the lump sum required at the end of period n.

### Step 2

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

Enter the present value (PV). The present value is the value of the lump sum at the beginning of period 1 (today).

### Step 4

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).