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:
-N = (-1) * Number of periods
r = Assumed interest rate per period
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:
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;
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