Present value interest factor

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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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