discount factor

The multiplier that converts a future amount into a present amount. For one payment after `t` years at rate `r`: discrete-compounding factor is `1 / (1 + r)^t`; continuous-compounding factor is `e^(−rt)`. Both shrink as `t` grows — money far in the future is worth less today — and both shrink faster when `r` is bigger. The factor is _unit-free_ (a number between 0 and 1), so multiplying a dollar amount by it gives a dollar amount. The whole present-value calculation is "future cash × discount factor, summed across time."