How to Use DISC Function in Google Sheets [2020]

The DISC function in Google Sheets is used to calculate the discount rate of a security, based on the price.

The Anatomy of the DISC Function in Google Sheets
A Real Example of Using the DISC Function
How to Use DISC Function in Google Sheets

This financial function is useful because it helps you find out the discount rate or the interest rate of an investment. This makes it easy to find out with the correct information.

Let’s look at an example.

You are looking to make an investment in bonds. Given a maturity date, price, and redemption value of the security, what is the interest rate of the investment?

How should we go about this problem?

The DISC function takes in all these inputs in order to calculate the discount rate or interest rate.

The Anatomy of the DISC Function in Google Sheets

The syntax of the DISC function is as follows::

=DISC(settlement, maturity, price, redemption, [day_count_convention])

Let’s look into the various sections of the function to understand how it works:

= is the equals sign that starts off any function in Google Sheets.
DISC is the name of our function.
settlement is the settlement date of the security, which is the date after issuance to the buyer of the delivered security.
maturityis the end date of the security, which is the date it can be redeemed at face value.
price is the price when the security was bought.
redemption is the redemption value of the security.
day_count_convention is an optional input that is an indicator of which day count method will be in use for the function. This is 0 by default.
- 0 indicates 30/360 – the US National Association of Securities Dealers (NASD) standard of 30-day months and 360-day years.
- 1 indicates Actual/Actual – this is the standard that is used for US Treasury Bonds, in addition to non-finance situations. It indicates the specific number of days between the specified dates and the actual number of days in the years between the dates.
- 2 indicates Actual/360 – the specific number of days between the specified dates and 360-day years.
- 3 indicates Actual/365 – the specific number of days between the specified dates and 365-day years.
- 4 indicates 30/360 – the European standard of 30-day months and 360-day years, but with adjustments to end-of-month dates according to European finance standards.

Note that you must input the settlement and maturity dates in a certain format, using DATE,TO_DATE functions to parse the text rather than simply entering the text.

A Real Example of Using the DISC Function

Let’s look at the example below to see how to use DISC function in Google Sheets.

Calculating the Discount for a Specified Investment in Google Sheets

This is a simple problem. We want to find the discount rate for a certain investment. The settlement and maturity dates are given below, and we have a price and redemption value. We will use the typical US standard for day count convention.

The function takes four arguments, one of which is optional. In the equation, it will look like this:

=DISC(C2,C3,C4,C5,C6)

As a result, we get 3.07%.

This simple problem can be practiced to perfection. Use the link below to get a copy of this problem set:

Make a copy of example spreadsheet

How to Use DISC Function in Google Sheets

In this section, we will show you a step-by-step process on how to use the DISC function in Google Sheets.

In this problem, we will be calculating the number of interest payments it takes between the settlement and maturity date.

Calculating the Discount Rate/Interest Rate in Google Sheets

To begin, let’s make sure the information of the dates provided is set with the DATE function, to ensure that no accidental errors will occur from a mistaken input of day, month, and year.
Then, click on a cell to make active, which you would like to display the number of coupons. For this guide, the answer will be in Cell C8.
Next, type the equal sign ‘=’ to start. Type in “DISC” or “disc” – Google Sheets functions are not case sensitive, so you can use either.
The auto-suggest box will create a drop-down menu. Select the COUPNUM function by clicking it.
After the opening bracket ‘(‘, enter the settlement date attribute.
Next, we enter the maturity date.
Next, we enter the price of the investment.
Next, we enter the redemption value of the investment.
Lastly, choose the day count convention. Here we have indicated zero, but it’s the same as leaving the attribute blank. You should be seeing the final result as a preview.
Hit enter and you’re done!

Given a practical problem where you should solve for the discount rate or interest rate, use the DISC function to find and study the correct input of dates, price, redemption, and conventions for your important financial decision-making.

And there you have it – you can now use the DISC function in Google Sheets together with the other numerous Google Sheets formulas to create even more effective formulas.