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What is the 'Present Value Interest Factor Of Annuity  PVIFA'
The present value interest factor of annuity (PVIFA) is 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
r
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BREAKING DOWN '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.
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