How to calculate Interest Rate from Discount Factor?

Question: Given a discount factor of .9671, what is the interest rate? Round to two decimal places.

I thought that would be the Discount Rate which is 0.9671 = 1 / (1+DR), or ~0.34, but that's showing up as an incorrect answer. So how would I go about getting to the Interest Rate?

1 Answer

  • Bryce
    Lv 7
    1 month ago
    Favorite Answer

     0.9671 = 1 / (1+DR)

    1+DR= 1/0.9671≈ 1.0340

    DR= 0.0340= 3.40%

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