The discount rate is determined from the first part of the cap rate formula as the risk-free rate plus the risk premium and in the example above, would be 4.20% + 7% or 11.20%. The growth rate is ...

d3sign / Getty Images The formula for calculating simple interest ... known as discounting. The discount factor can be thought of as the reciprocal of the interest rate. It's the factor by which ...

It's important to note that the bank discount rate uses simple interest ... a 360-day year is often used. Since the formula uses 360 days instead of 365 days or 366 days in a year, the bank ...

We can use a simple formula to calculate the present value of a perpetuity annuity. This formula will tell us what a perpetuity is worth based on a discount rate, or a required rate of return.

A simple rate of return is calculated ... The discounted cash flow (DCF) formula takes projected future cash flows and reduces them for each year by applying a discount rate.