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The present value interest factor (PVIF) is a number from a table that makes it easier to calculate the present value of a payment or value to be received in the future. The PVIF table shows a discount factor based on the discount interest rate and the number of time periods before the value will be received. The table is usually presented with the time period in the rows and the interest rate in the columns. 

For instance, a person needing to know the present value of $1,000 that will be received in five years where the discount rate is 6% will go to the table and find the row for five years, and then move to the right for the 6% column to find the discount factor of .7050. She will then multiply $1,000 by that factor to find that the present value is $705. 

Each factor in the table is derived from the formula:

PVIF = 1/(1+r)^t

Where r is the interest rate and t is the time period. 

In the example, multiplying $1,000 by the formula of 1/(1+6%)^5 gives the same answer of $705.

 

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