Present value interest factor

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

Let:

$W$ = the amount borrowed

$i$ = the effective (ie convertible annually) annual interest rate charged

$n$ = the number of years over which the loan will be outstanding

$A$ = the annual amount of the fixed regular payments that will amortize (i.e. repay) the loan

$m$ = the frequency of these regular payments, e.g. m = 2 means the payments are half-yearly.

Then:

A = W / PVIFA

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

See also

• Annuity (financial contracts)
• Fixed rate mortgage
• Amortization calculator