What is 'discount factor' in SAP FS-BA-SD - Source Data?

discount factor - Overview

• Component: FS-BA-SD

• Component Name: Source Data

• Description: The factor by which a future cash flow is multiplied in order to obtain its present value. The discount factor used depends on the amount of time between the current date and the future payment date.

discount factor - Details

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  Key Concepts: 
  Discount factor is a term used in SAP's Financial Services - Basic Accounting - Sales and Distribution (FS-BA-SD) source data. It is a numerical value that is used to calculate the present value of a future payment. The discount factor is calculated by taking the present value of the future payment and dividing it by the future payment amount. 
  
  How to use it: 
  The discount factor can be used to calculate the present value of a future payment. To do this, the discount factor must be multiplied by the future payment amount. This will give you the present value of the future payment. 
  
  Tips & Tricks: 
  When calculating the discount factor, it is important to remember that the higher the discount rate, the lower the present value of the future payment will be. This means that if you want to maximize your present value, you should use a lower discount rate. 
  
  Related Information: 
  The discount factor can also be used to calculate other financial values such as net present value and internal rate of return. Additionally, it can be used to compare different investments and determine which one is more profitable.