Discount factor
The multiplier that converts a future amount into a present one: the further away the date and the higher the rate, the smaller it is.
Formula
The rate per period and the period number. The factor is stored as a fraction of one and is always below one while the rate is positive.
How to read the number
Shows plainly why distant forecast years barely affect a valuation while the near ones decide it.
When the metric lies
Also known as: present value factor