Present Value Interest Factor Of Annuity - PVIFA
Definition of 'Present Value Interest Factor Of Annuity - PVIFA'
A factor which can be used to calculate the present value of a series of annuities. The initial deposit, earning interest at the periodic rate (r), perfectly finances a series of (N) consecutive dollar withdrawals. PVIFA is also a variable used when calculating the present value of an ordinary annuity.
PVIFA = 1 - (1 + r)^-N
Investopedia explains 'Present Value Interest Factor Of Annuity - PVIFA'
The most common values of both N and r can be found in a PVIFA table, which will immediately show the value of PVIFA. This table is a particularly useful tool for comparing different scenarios with variable N and r values.