An annuity is a series of equal payments made at regular intervals over a specified period of time. Common examples include loan payments, regular deposits into a savings account, and insurance payouts.

What is the PVIFA factor used for?

It's a shortcut used in financial analysis and for creating time value of money tables. Instead of calculating the present value of each individual payment in a long series and adding them up, you can simply calculate one PVIFA factor and multiply it by the payment amount to get the same result, which is much more efficient.

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Unlocking Annuity Valuations: The PVIFA Calculator

The Present Value Interest Factor of an Annuity (PVIFA) is a financial metric used to calculate the present value of a series of equal future payments (an ordinary annuity). Instead of discounting each payment individually, the PVIFA provides a single factor you can multiply by the regular payment amount to get the total present value. This calculator helps you find both the PVIFA factor and the total present value of the annuity.

📊 How to Use the PVIFA Calculator

Enter Interest Rate per Period (r) (%): Input the discount rate or interest rate for each period of the annuity.
Enter Number of Periods (n): Input the total number of payments in the annuity series.
Enter Payment per Period (Optional): If you want to find the total Present Value of the annuity, enter the fixed payment amount made each period.
Calculate: Click the "Calculate PVIFA" button.

The calculator will display the PVIFA factor and, if you provided a payment amount, the total Present Value of the Annuity. A step-by-step breakdown of the PVIFA calculation is also shown.

The PVIFA Formula

The formula for calculating the Present Value Interest Factor of an Annuity is:

PVIFA = [1 - (1 + r)⁻ⁿ] / r

Where:

PVIFA = Present Value Interest Factor of an Annuity
r = Interest rate per period (as a decimal)
n = Number of periods

Once you have the PVIFA, you can easily find the Present Value (PV) of the annuity stream:

PV of Annuity = Payment per Period × PVIFA

💡 Frequently Asked Questions (FAQ)

What is an annuity?: An annuity is a series of equal payments made at regular intervals over a specified period of time. Common examples include loan payments, regular deposits into a savings account, and insurance payouts.
What is the PVIFA factor used for?: It's a shortcut used in financial analysis and for creating time value of money tables. Instead of calculating the present value of each individual payment in a long series and adding them up, you can simply calculate one PVIFA factor and multiply it by the payment amount to get the same result, which is much more efficient.

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PVIFA Calculator