PVIF Calculator APK Android App Free Download

The notion asserts that the current value of money is more profitable than its future value. And the reason for this is that money can increase in value over https://online-accounting.net/ a period of time. Therefore, any sum received sooner is valuable because it may be reinvested to generate interest as long as money can earn interest.

• The present value interest factor is based on the key financial concept of the time value of money.
• Provided money can earn interest, any amount of money is worth more the sooner it is received.
• The period of the annuity payments and the investment vehicle used are used to compensate for the period risk.
• Now we know that every $1 you receive is, on average, worth 6.73 times more in present value – that is, $6.73.

To calculate the current present value of the annuity, multiply the PVIFA factor value by the monthly payment amount. Over a series of payment intervals, the original payment receives interest at the periodic rate . Therefore, PVIFA is also employed to calculate a financial annuity’s present value. The user will be presented with a drop-down menu to select the kind of allocation. Depending on the type of allocation, we need to specify slightly different text in A9. Finally, we’ll call the PV() method in A10, but this time periods with FV set to 0 and PMT set to 1.

How to use the PVIFA calculator? An example

This present value factor provides a simple evaluation to determine the present value dollar amount of a sum of money to be received in future. PVIF Calculator is an online tool used to calculate PVIF or Present Value Interest Factor of a single dollar, rupee, etc. PVIF is used to determine the future discounted rate of a selected value as well as the current value of a particular series for a set number of periods. Checkout the PV Table below which shows PVIFs for rates from 0.25% to 20% and periods from 1 to 50. PVIF tables often provide a fractional number to multiply a specified future sum by using the formula above, which yields the PVIF for one dollar. Then the present value of any future dollar amount can be figured by multiplying any specified amount by the inverse of the PVIF number.

The two factors needed to calculate the present value factor are the time period and the discount rate. Suppose an entrepreneur has invested a considerable amount of money in a business of 3d printers. Whereas the interest rate is 4%, now find out the present value of this annuity. PVIFA is used to determine whether taking a single payment immediately or several annuity payments in the future is more beneficial to an individual or business. In other words, whether there is more value in future payments of a single payment now. This factor can only be used when the payments in the future are constant and known.

Example of the PVIF

If those payments are for a specified sum over a predetermined period, the PV interest component can only be calculated. Present value factor is often available in the form of a table for ease of reference. This table usually provides the present value factors for various time periods and discount rate combinations. While using the present value tables provides an easy way to determine the present value factor, there is one limitation PVIF Calculator to it. PVIFA is a derivative indicator that proposes the present value of the series of cash flows that the investor receives over the period at a given rate of interest. This factor will tell what would be the present amount if the investor has alternate options. Using a PVIFA table or chart will be of more convenience to users who want to look up the interest rates and periods of time, especially if the number of periods overrun 10.

But that’s not all, we have a great calculator that will help you figure out and learn something new from the present value, and that is our Present Value Calculator. He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain “Financial Management Concepts in Layman’s Terms”.

Present Value of an Annuity

This factor is often used to determine an ordinary annuity or the present value of some series of annuities. Enter the interest rate per period and number of periods to calculate the present value interest factor of an annuity using this PVIFA calculator.

PVIFA calculator or the present value interest factor refers to payments that you will receive once at a given time or gradually at several periods of time. The PVIFA calculator is a tool that can predict accurately how much money the investment will bring about and whether it is beneficial to invest in such an annuity or not. The PVIFA calculator is a new tool that helps business people reach a convincing answer regarding the current value of the cash flows of an annuity. Taking advantage of PVIFA calculator, people can compare the future outlook of different types of investment and decide based on the present value of future annuities. People normally trust the current perspective of the highest future value. All you need to do is to input the interest rate per periods and the number of periods. Let us say that you invested $4000 into a promising Agricultural based start-up, and you will receive payment over 5 years with a 4% interest rate per period.

Math Tools

This is a rate that is designed to consider future risks as well. The present value interest factor of the annuity is a tool that we can use to compute the present value of a number of annuity payments. Put another way, it’s a figure that may be used to calculate the present value of a series of payments. The above formula will calculate the present value interest factor, which you can then use to multiple by your future sum to be received. Present value factor, also known as present value interest factor is a factor that is used to calculate the present value of money to be received at some future point in time. In other words, this factor helps us to determine whether cash received now is worth more, or less than when it is received later. PVIFA is defined as the present value of the interest factor of an annuity.