It can be expressed in terms of days, months, or years. The time period is basically the amount of time after which the money is to be received. The present value interest factor formula is as follows: This is with values for different combinations for time periods and interest rates. As we mentioned earlier, PVIFs are commonly presented in the form of a table. This is a sum that is to be received at a future date. The formula for the present value interest factor can be used to estimate the current worth of a sum of money. What Is the Formula for the Present Value Interest Factor? The table will usually provide the present value factors for a number of different combinations of time periods and discount rates. This is for figuring out the present value of the future cash flows of an investment.įor easier reference, the PVIF is commonly shown in the form of a table. The PVIF is an important part of the calculation of the present value of money under the Discounted Cash Flow model. The factor is basically used to help determine whether the cash received now is worth more or less than what will be received later. The present value interest factor (PVIF) is a factor used to calculate the present value of a sum of money that is to be received at some point in the future. What Is the Present Value Interest Factor? In terms of reference, present value interest factors are normally made available in table form.Present value interest factors are most regularly used when analyzing annuities. The present value interest factors (PVIFs) are commonly used to make the calculation of a time-value of a sum of money simpler.
0 Comments
Leave a Reply. |