The Discount Rate is a crucial concept in finance, particularly in the valuation of future cash flows. It represents the rate of return used to discount a future sum of money back to its present value. Essentially, it's the minimum acceptable rate of return that an investment must yield to justify the time and risk involved. A higher discount rate implies greater risk or a longer time horizon, leading to a lower present value of future earnings.
function calculateDiscountRate() {
var futureValue = parseFloat(document.getElementById("futureValue").value);
var presentValue = parseFloat(document.getElementById("presentValue").value);
var numberOfPeriods = parseFloat(document.getElementById("numberOfPeriods").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(futureValue) || isNaN(presentValue) || isNaN(numberOfPeriods) ||
futureValue <= 0 || presentValue <= 0 || numberOfPeriods = futureValue) {
resultDiv.innerHTML = "Present Value must be less than Future Value for a positive discount rate.";
return;
}
// Formula: r = (FV / PV)^(1/n) – 1
var discountRate = Math.pow((futureValue / presentValue), (1 / numberOfPeriods)) – 1;
var discountRatePercentage = discountRate * 100;
resultDiv.innerHTML = "