Present Value Interest Factor of Annuity Calculator
PVIFA is an abbreviation for Present Value Interest Factor of Annuity. It is an idea based on the time value of money. The PVIFA Equal to 1 number of value less than numbers of value 1 added the interest rate period (%) less than numbers of periods years divided to r interest rate per period (%) .
The formula us,
eight payments of $2,000 – one per year. The interest rate equal to 3%.
- Determine the number of periods and interest rate. In this case, we have n = 8, and r 3% = 0.03
- Calculate PVIFA according to the PVIFA formula:PVIFA = (1 – (1 + r)-n) / rPVIFA = (1 – (1 + 0.03)-8) / 0.03
PVIFA is = 7.99
- How much is the payment worth, then? The total value of these eight payments will not be equal to simply 8 * $2000. Instead, we have to multiply the payment value by the PVIFA:7.99 * $2,000 = $15,980
- The present value of this annuity is equal to $15,980.