This **PVIFA calculator** estimates the present value interest factor of annuity by considering an assumed interest rate per period and a number of periods. There is in depth information on how to determine this indicator below the form.

## How does this PVIFA calculator work?

This financial tool can help when trying to determine the present value interest factor of annuity which is a value that can be used to calculate the present value of an annuity series.

The algorithm behind this *PVIFA calculator* uses the formula explained here and it requires the interest rate and the number of periods to be given:

Where:

-N = (-1) * Number of periods

r = Assumed interest rate per period

## PVIFA definition

In finance theory, PVIFA is the acronym for present value interest factor of annuity which represents a factor that can be used to determine the present value of a series of annuity, the monthly payment needed to payoff a loan or to calculate the PV of an ordinary annuity.

In case of a monthly repayment value of a loan the formula that depends on the PVIFA is:

Where:

LA = Loan amount borrowed;

t = number of regular intervals per year at which time the borrowed amount is to be paid back;

r = annual interest rate;

n = number of years to payoff the debt;

MP = monthly payment value.

## The usability of the PVIFA

Most often PVIFA is used in one of the following cases:

■ Estimating the regular payment on a loan no matter of its type. This payment consists in two parts: principal plus interest;

■ Forecasting the present value of a series of annuities;

■ Calculating the PV of an ordinary annuity.

## Example of a calculation

In case of an yearly interest/discount rate of 5% and a term of 10 years the PVIFA figure is 7.72.

23 Feb, 2015 | 0 comments
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