Discount Factor Table: Present Value Reference for Years 1–20

If you're studying for your ACCA or CIMA exams, or working through a net present value (NPV) calculation, a discount factor table is one of the most useful reference tools you can have. This page gives you the full table — discount factors for interest rates from 1% to 15% across years 1 to 20 — along with a quick guide on how to use it.

What Is a Discount Factor?

A discount factor converts a future cash flow into its present value. The idea behind it is simple: money received today is worth more than the same amount received in the future, because today's money can be invested and earn a return. The discount factor tells you how much a pound (or euro) received in the future is worth in today's terms.

The formula to calculate a discount factor is:

Discount Factor = 1 ÷ (1 + r)ⁿ

Where r is the discount rate (expressed as a decimal) and n is the number of periods (usually years). Rather than calculate this for every cash flow individually, most people use a pre-calculated table — which is exactly what ACCA and CIMA exam papers provide, and what you'll find below.

Discount Factor Table (Years 1–20)

The table below gives the present value of £1 received at the end of year n, discounted at rate r. To use it, find the row for your time period and the column for your discount rate, then multiply by the cash flow amount.

How to Use the Discount Factor Table

Using the table is straightforward. Let's say you expect to receive £5,000 in year 4, and your cost of capital (discount rate) is 8%. Find year 4 on the left, move across to the 8% column, and you get 0.735. Multiply: £5,000 × 0.735 = £3,675. That's the present value of that future cash flow.

For a full NPV calculation, you do this for every year's cash flow, then add them all up and subtract the initial investment. If the result is positive, the project creates value; if negative, it destroys it.

Worked Example: NPV Calculation

A company is evaluating a project with an initial investment of £10,000 and cash flows over five years, using a 10% discount rate:

A positive NPV of £1,262 means the project is expected to generate value above the required 10% return — a straightforward accept decision.

Cumulative Discount Factor Table (Annuity Factor)

If cash flows are equal each year (an annuity), you can use the cumulative discount factor — also called the present value annuity factor — instead of discounting each year separately. This is the sum of the individual discount factors for each year up to n.

Discount Factor Tables in ACCA and CIMA Exams

Both ACCA and CIMA provide discount factor tables in the exam paper itself — you don't need to memorise values. However, knowing how to read the table quickly and apply it correctly is essential. In Financial Management (ACCA FM) and CIMA's Financial Management pillars, NPV questions appear regularly and often carry significant marks. Practising with the table above before your exam will make the process faster and more reliable under pressure.

For more on how discount factors are calculated from first principles, see our guide on how to calculate a discount factor. If you're preparing for your ACCA exams, explore our ACCA courses and study resources.

Frequently Asked Questions

What is the discount factor at year 0?

The discount factor at year 0 is always 1.000, regardless of the discount rate. This is because year 0 represents the present — there's no time to discount, so £1 today is worth exactly £1 today.

What's the difference between a discount factor and a discount rate?

The discount rate (e.g. 10%) is the rate of return you require from an investment. The discount factor is derived from that rate — it's the multiplier (e.g. 0.909 for year 1 at 10%) that converts a future cash flow into its present value. You use the discount factor in the actual calculation.

Can I use these tables for ACCA FM and CIMA Financial Management exams?

Yes — the values in these tables match those provided in ACCA and CIMA exam papers. Use them to practise NPV, IRR, and lease vs buy calculations before your sitting.

What if my discount rate isn't in the table?

You can calculate the discount factor directly using the formula 1 ÷ (1 + r)ⁿ. Alternatively, for NPV calculations requiring an IRR where the exact rate isn't tabled, you can interpolate between two table values.