Finance: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:

[math]\displaystyle{ W }[/math] = the amount borrowed

[math]\displaystyle{ i }[/math] = the effective (ie convertible annually) annual interest rate charged

[math]\displaystyle{ n }[/math] = the number of years over which the loan will be outstanding

[math]\displaystyle{ A }[/math] = the annual amount of the fixed regular payments that will amortize (i.e. repay) the loan

[math]\displaystyle{ m }[/math] = 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