The discount factor for 2 time periods at 10% discount rate is ______.
A).9090
B).8899
C).8264
D).7513

Question

​The discount factor for 2 time periods at 10% discount rate is ______.
A).9090
B).8899
C)​.8264
D)​.7513

Quizplus · Accepted Answer

The discount factor can be calculated using the formula: 
Discount factor = 1 / (1+rate)^time period

Here, the rate is 10% (or 0.1) and the time period is 2.

So, Discount factor = 1 / (1+0.1)^2 
                      = 1 / 1.21 
                      = 0.8264

Therefore, the correct answer is C) .8264.

​The Discount Factor for 2 Time Periods at 10% Discount