Discount Rate — Functions & Formulae

Present-value discounting function

d(V_t,r,t) = PV_t

Maps future costs or health outcomes to values at a common reference time using the applicable discount rate and timing convention.

Present value of a single future value
```
PV_t = V_t/(1+r)^t
```
Converts one cost or health outcome occurring at time t to its value at the reference time.
Total present value of a stream
```
PV_total = sum_(t=0)^T [V_t/(1+r)^t]
```
Sums discounted values occurring across the selected time horizon.
Separate discounting of costs and health outcomes
```
PV_C = sum_(t=0)^T [C_t/(1+r_C)^t]; PV_E = sum_(t=0)^T [E_t/(1+r_E)^t]
```
Calculates present values for cost and health-outcome streams using their respective annual rates when the governing reference case requires equal or differential discounting.