How to calculate PVIFA in Microsoft Excel

By SpreadCheaters
Page last updated: 27/06/2023 | Next review date: 27/06/2025
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PVIFA stands for “Present Value Interest Factor of Annuity.” It is a financial term used in the field of finance and investment analysis. PVIFA is a factor used to calculate the present value of a series of future cash flows, known as an annuity. An annuity refers to a fixed sum of money that is paid or received at regular intervals over a specified period. The PVIFA represents the value of each future cash flow, discounted to its present value. It allows investors to determine the current worth of an annuity, taking into account the time value of money and the discount rate.

In this tutorial, we will learn how to calculate PVIFA in Microsoft Excel. To calculate PVIFA in Excel the users can utilize the generic formula for PVIFA.

Method 1: Utilizing the Formula for PVIFA

The formula to calculate PVFA is

      PVIFA = P * [1 – (1 + r/n)^t*n] * [(1 + r/n) / (r/n)]

Where,

  • P is the “periodic payment”
  • t is the “number of years”.
  • n is the “occurrence in a year”
  • r is the “rate of interest”

Step 1 – Organize the Data

  • Organize the required data to calculate the PVIFA.

Step 2 – Utilize the Formula

  • Utilize the formula and substitute the required values.
  • Hit the Enter key to calculate the PVIFA.

Step 3 – Apply the Formula to Each cell

  • Utilize Autofil to apply the formula on each cell.

Method 2: Calculating PVIFA for Ordinary Annuity

The Present Value Interest Factor of Annuity (PVIFA) for an ordinary annuity represents the present value of a series of future cash flows where payments are made at the end of each period. It is used to calculate the present value of an ordinary annuity.

The formula for calculating PVIFA for an ordinary annuity is

       PVIFA = P * [1 – (1 + r/n)-t*n] / (r/n)

Where:

  • P is the “periodic payment”
  • t is the “number of years”.
  • n is the “occurrence in a year”
  • r is the “rate of interest”

Step 1 – Organize the Data

  • Organize the required data to calculate the PVIFA for an ordinary annuity.

Step 2 – Utilize the Formula

  • Utilize the formula and substitute the required values.
  • Hit the Enter key to calculate the PVIFA.