How does the discount factor work?

In my textbook they use an example of a discount factor of 6% like this:
Year 1 – 0.94
Year 2 – 0.89
Year 3 – 0.84
Year 4 – 0.79

I do not understand where these numbers came from and there is no further detail in the book. This is for AQA A level business studies unit 3

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One Response to “How does the discount factor work?”

  1. ? says:

    6% = 100% – 94% = .94
    You pay 94 cents instead of a dollar.
    6% discount on 94 cents would give you a price of 89 cents.
    etc.

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