# PVIFA Calculator

## What is PVIFA Calculator?

PVIFA Calculator is a useful tool that sets to compute the worth of money over time. The term PVIFA calculator which is most often used in economics stands for the present value of the interest factor of an annuity which is directly linked with the time value of money. Taking the fact that over time, the value of money is subject to depreciation, PVIFA calculator is designed to depict a general view of how the value of money will change in a specific period of time and thus help you make up your mind for the best investment.

### A Close Look at the PVIFA calculator

As a tool, the PVIFA calculator has two basic metrics which are

• Interest Rate of Periods
• Number of periods

In the PVIFA calculator, the interest rate of periods is a percentage and the number of periods should be interested as a number.

### What is PVIFA Formula?

As a calculation tool, PVIFA calculator sets out to help those who need insight into the time value of money and how beneficial an investment will be. Though this calculation can be done by the PVIFA calculator, having an idea about it provides a clear understanding of how it all works. The main formula that PVIFA calculator works with is:

PVIFA = (r1−(1+r)−n)/r

In this formula there are 2 variables which are represented by r and n. the first variable, r, represents the rate of interest of the periods, shown in the form of decimal, and n stands for the number of periods which can be years, decades, etc.

This formula enables users to calculate the future value of consequent payments which will be obtained in a special manner and at a special rate of interest. According to this method, the payment is multiplied by the factor.

Using this formula will let the users recognize the most beneficial manner of payments. As an example, making a choice between one single payment or some successive payments in while future may sound complicated. The PVIFA calculator gives users a good view of the most profitable choice. It must be also taken into account that the PVIFA calculator works only if there is a guarantee about constant future payments

#### How does the PVIFA calculator formula work?

As mentioned, r stands for the rate of interest. This rate is actually the average rate of interest for periods of time. As an unsaid rule, most often the rate of interest remains constant through all periods, however, if the rates are different the average of all periods must be inserted in this formula.

In the next level, the number of periods should be determined and inserted. In this formula, the number of periods is represented by n.

### PVIFA Table

Using a PVIFA table or chart will be of more convenience to users who want to look up the interest rates and periods of time, especially if the number of periods overrun 10. As a useful tool, tables provide users with the possibility of comparing different future possibilities. In each table, there are two variables as “n” and “r”. The rate of interest is presented across the top row and the first column is to display the number of periods. The only downside that gives the present value interest factor table a negative point is that it is necessary for the calculated figures to be rounded which in return lessens the precision.

### How can PVIFA calculator act as a useful tool?

PVIFA or The present value factor interest of annuity is a financial help that most often advisers take advantage of. This tool can help you make a comparison between taking the entire annuity at the moment or later on. This decision will be made based on evaluations of the current value of money and its time value.