# Present Value Interest Factor - PVIF

## What is the 'Present Value Interest Factor - PVIF'

The present value interest factor (PVIF) is a factor that can be used to simplify the calculation for finding the present value of a series of values. PVIFs can be presented in the form of a table with PVIF values separated by respective period and interest rate combinations.

The 'r' represents the discount interest rate, and the 't' represents the number of periods.

Next Up

## BREAKING DOWN 'Present Value Interest Factor - PVIF'

Using the PVIF works best when you are attempting to discount one value in the future. For example, assume you are going to receive \$5,000 in four years time, with the current discount interest rate being 8%. Using the standard present value formula the calculation would be \$5,000 / (1+.08)4 .

This would result in a present value of approximately \$3,675.15. By using a PVIF table, an individual can identify the factor for this calculation being 0.73503 (calculated: 1/(1.08^4)). They can then multiply the \$5,000 by 0.73503, which results in \$3675.15 as well. This is another way to come to the same answer as the standard present value formula, but becomes a useful technique when you are comparing or dealing with a large number of values.

RELATED TERMS
1. ### Present Value Interest Factor Of ...

A factor which can be used to calculate the present value of ...
2. ### Adjusted Present Value - APV

The Net Present Value (NPV) of a project if financed solely by ...
3. ### Present Value - PV

The current worth of a future sum of money or stream of cash ...
4. ### Net Present Value - NPV

Net Present Value (NPV) is the difference between the present ...
5. ### Present Value Of An Annuity

The current value of a set of cash flows in the future, given ...
6. ### Net Present Value Of Growth Opportunities ...

A calculation of the net present value of all future cash flows ...
Related Articles

### Calculating Present Value Interest Factor

The present value interest factor is a number that makes it easier to calculate the present value of a payment or value to be received in the future.

### Time Value Of Money: Determining Your Future Worth

Determining monthly contributions to college funds, retirement plans or savings is easy with this calculation.
3. Investing

### Understanding The Time Value Of Money

Find out why time really is money by learning to calculate present and future value.
4. Markets

### Calculating the Present Value of an Annuity

The present value of an annuity is the current, lump sum value of periodic future payments as calculated using a specific rate.
5. Managing Wealth

### How to Calculate the Value of Annuities

Here's everything you need to account for when calculating the present and future value of annuities.
6. Markets

### Calculating Future Value

Future value is the value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today.
7. ETFs & Mutual Funds

### Value Investing Strategies in a Volatile Market

Volatile markets are a scary time for uneducated investors, but value investors use volatile periods as an opportunity to buy stocks at a discount.
8. Investing

### Calculating Net Present Value at Different Points Using Excel

Calculating the net present value (NPV) of your investment projects using Excel.
9. Managing Wealth

### How to Calculate Required Rate of Return

Investors use the required rate of return to decide where to put their money, and corporations use it to decide if they should pursue a new project.
10. Markets

### Present Value Interest Factor of Annuity (PVIFA)

PVIFA can be used to calculate the present value of a series of annuities by considering cash flows and depreciation.
RELATED FAQS
1. ### How do you use a financial calculator to determine present value?

Learn how to utilize a financial calculator to calculate present value. Understand the necessary data, why it is important ... Read Answer >>
2. ### How do investors calculate the present value of a future investment?

Learn what present value is, how to calculate the present value of a future investment, and what formula investors use to ... Read Answer >>
3. ### Why is the time value of money (TVM) an important concept to investors?

Understand why the time value of money is an important concept for investors. Learn when present value and future value calculations ... Read Answer >>
4. ### What are the disadvantages of using net present value as an investment criterion?

While net present value (NPV) calculations are useful when you are valuing investment opportunities, the process is by no ... Read Answer >>
5. ### Why would I need to calculate the present value of an annuity?

Find out what information is needed to calculate the present value of an annuity, including an example of the present value ... Read Answer >>
6. ### Why does time value of money (TVM) assume that a dollar today is worth more than ...

Learn about time value of money, or TVM, and how a present value calculator is used to determine the value of money received ... Read Answer >>
Hot Definitions
1. ### Put Option

An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
2. ### Frexit

Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
3. ### AAA

The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
4. ### GBP

The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
5. ### Diversification

A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
6. ### European Union - EU

A group of European countries that participates in the world economy as one economic unit and operates under one official ...