where 
here s an example to show how the discount rate works let s say you want to determine the discount rate on a certain investment using the following variables now let s use the formula above to determine the discount rate for the fractional exponent you can convert it to a decimal 1 10 dr fv pv 1 n 1dr 5 000 3 500 1 10 1dr 1 42857 0 1 1dr 1 03631 1dr 0 03631so in this case the discount rate is 3 631 