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Present value interest factor

From Wikipedia, the free encyclopedia

In economics, Present value interest factor, also known by the acronym PVIF, is used in finance theory to refer to the output of a calculation, used to determine the monthly payment needed to repay a loan. The calculation involves a number of variables, which are set out in the following description of the calculation:

Formula

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Let:

= the amount borrowed
= the effective (ie convertible annually) annual interest rate charged
= the number of years over which the loan will be outstanding
= the annual amount of the fixed regular payments that will amortize (i.e. repay) the loan
= the frequency of these regular payments, e.g. m = 2 means the payments are half-yearly.

Then:

A = W / PVIFA

where PVIFA = 1m × (1−(1+i)^(−n))÷((1+i)^(1m)−1)

See also

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References

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