Description
Return exp(-years × log1p(annualRate)), equivalent to (1+rate)^(-years).
Financial model terms depend on a currency, valuation date, and stated formula. A supplied discount or allocation rule is a modeling assumption and does not establish a market price or an appropriate investment decision.
Return exp(-years × log1p(annualRate)), equivalent to (1+rate)^(-years).
When to use this tool
Use Policy Benefit Cost Discount Factor when you need one financial arithmetic component under explicit supplied assumptions.
How to use the tool and how it works
- Enter annualRate, years. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read discountFactor. Use the output convention below.
Require annualRate > -1 and nonnegative years. Return exp(-years × log1p(annualRate)), equivalent to (1+rate)^(-years).1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| annualRate | Annual Rate | Required. Finite number; strictly above -1. |
| years | Years | Required. Finite number; minimum 0. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| discountFactor | Discount Factor | Required. Finite number. |
{
"input": {
"annualRate": 0.1,
"years": 2
},
"output": {
"discountFactor": 0.8264462809917356
}
}Limitations and assumptions
- Rate is an effective annual fraction and years can be fractional; the tool does not choose a discount rate, account for inflation, or value a cash-flow stream.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Evaluate the complete cash-flow model, contract terms, and relevant professional advice before acting on the result.
References
Similar or alternative tools
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