// Workers AI · dad joke modeWhat did the present value interest factor say? "I'm discounted to meet you.

In economics, present value interest factor (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 (loan)

$i$ = the effective (i.e. 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:

$A={\frac {W}{PVIF}}$

where

$PVIF={\frac {1}{m}}\cdot {\frac {1-(1+i)^{-n}}{(1+i)^{1/m}-1}}$

In its simplest form,  PVIF  is calculated using the formula:

$PVIF=(1+r)^{-n}$

where $r$ is the discount rate (or interest rate) and $n$ is the number of periods.

See also

• Time value of money
• Life annuity
• Fixed-rate mortgage
• Amortization calculator