What is the 'Present Value Interest Factor  PVIF'
The present value interest factor (PVIF) is a factor that is utilized to provide a simple calculation for determining the present value dollar amount of a sum of money to be received at some future point in time. For determination or consideration of a series of possible present values, PVIFs are often represented in the form of a table used for calculating the present value of a future sum with varying interest rate and time period combinations. The present value interest factor is based on the foundational financial concept of the time value of money, which states that the present value of a sum of money not to be received until sometime in the future must be discounted from the future amount according to a rate of return that could be earned on capital at the present time.
BREAKING DOWN 'Present Value Interest Factor  PVIF'
The formula for calculating the present value interest factor is as follows:
PVIF = a / (1 + r) ^ n
The "a" represents the future sum to be received, "r" represents the discount interest rate, and "n" represents the number of years or other time period.
PVIF Calculation and PVIF Tables
Here is an example of calculating the PVIF and determining the present value of a future sum: Assume an individual is going to receive $10,000 five years from now, and that the current discount interest rate is 5%. Using the formula for calculating the PVIF, the calculation would be $10,000 / (1 + .05) ^Â 5. The resulting PVIF figure from the calculation is $1904.76. The present value of the future sum is then determined by subtracting the PVIF figure from the total future sum to be received. Thus, the present value of the $10,000 to be received five years in the future would be $10,000  $1904.76 = $8,095.24.
PVIF tables often provide a fractional number to multiply a specified future sum by using the formula 1 / (1 +r) ^ n, 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 PVIF and the Time Value of Money
The PVIF, which is used to calculate the present value of a future sum of money, can be seen as the flip side of the coin from calculating the future value of a present sum of money. Both ideas are derived from the concept of the time value of money.

Present Value  PV
The current worth of a future sum of money or stream of cash ... 
Adjusted Present Value  APV
The Net Present Value (NPV) of a project if financed solely by ... 
Net Present Value  NPV
Net Present Value (NPV) is the difference between the present ... 
Present Value Of An Annuity
The present value of an annuity means the current value of a ... 
Terminal Value  TV
The value of a bond at maturity, or of an asset at a specified, ... 
Trailing EPS
The sum of a company's earnings per share for the previous four ...

Investing
What is Present Value?
Present value tells us how much a future sum of money is worth today, given a specified rate of return. This is an important financial concept based on the principle that money received in the ... 
Investing
Time Value Of Money: Determining Your Future Worth
Determining monthly contributions to college funds, retirement plans or savings is easy with this calculation. 
Investing
Understanding the Time Value of Money
Find out why time really is money by learning to calculate present and future value. 
Small Business
Calculating Net Present Value at Different Points Using Excel
Calculating the net present value (NPV) of your investment projects using Excel. 
Investing
The Difference Between Enterprise Value and Equity Value
Enterprise value calculates a businessâ€™s current value, while equity value offers a snapshot of that businessâ€™s current and potential future value. 
Investing
Why Stocks Outperform Bonds
Why have stocks historically produced higher returns than bonds? It's all a matter of risk. 
Investing
Learn Simple and Compound Interest
Interest is defined as the cost of borrowing money, and depending on how it is calculated, it can be classified as simple interest or compound interest. 
Investing
Valuing Firms Using Present Value of Free Cash Flows
When trying to evaluate a company, it always comes down to determining the value of the free cash flows and discounting them to today.

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 >> 
Why the time value of money (TVM) matters 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 >> 
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 >> 
What is the difference between present value and net present value?
Understand the difference between the present value and net present value calculations and how these formulas are used in ... Read Answer >> 
What is the difference between economic value and market value?
Learn about the differences between economic value and market value. Discover how they serve different purposes for businesses ... Read Answer >>