FVIF is the future value interest factor of $1 that earns i% interest rate for n number of periods. Here me Abraham A. will provide you with a study guide to explain and illustrate future value interest factor of $1.
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FVIF is an acronym for future value interest factor of $1 that earns an i% interest rate for n number of periods. The FVIF may be thought of as interest earned on a loan worth $1 on which the borrow agrees to pay a compound interest for a number of periods. The interest may be earned on different frequencies that are referred to as compounding frequencies of interest which range from annual compounding all the way down to daily compounding. The maximum interest may be earned when interest is compounded continuously, the compounding frequency of interets may exceed that of a year such as biennial and triennial compounding of interest. I present you a FVIF document as a Word file that explains the FVIF giving you the various formulas that are used in FVIF calculation. The FVIF calculation is demonstrated with example calculation taken from real life money lending situations. The document is a must have for anyone who is studying financial management or someone working as a financial analyst or a banker.
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The "Value Pack" offers not just the FVIF guide but it gives away the tadXL v0.8 add-in for Excel 2007, 2010 and 2013. The Excel add-in contains 14 financial functions to find interest rates including on for finding FVIF in Excel. Excel has none of its own native financial functions to find FVIF and here the tadFVIF function makes it easy to calculate future value interest factor of $1 using Excel formula such as =tadFVIF( 10%, 10) where 10% is the interest rate and 10 is the number of periods. But then there are more options built into this function for compounding frequencies of interest and for defining the length of the period along with use of different discounting conventions. The compounding frequencies may be such as annual, semi-annual, quarterly, monthly, weekly, and daily or even infinite. The length of periods may be defined as a day, week, month, quarter, half-year and year or even binennial. The mid-year discounting may be used rather than the full-year discounting. Now let us take the same FVIF calculation using 10% interest rate, 10 number of periods, where the period is a quarter using monthly compounding of interest. Now we would type in an Excel FVIF formula as =tadFVIF( 10%, 10, 1/12, 1/4, 1/2) where 1/12 denotes monthly compounding, 1/4 suggests that period is a month and 1/2 for mid-year discounting. Thus the "Value Pack" offers more value for the money you put in and is a must have tool for anyone who is studying finance or someone working as a professional analyst.
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