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PVIFA is the present value interest factor of ordinary annuity worth $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 present value interest factor of ordinary annuity worth $1.
PVIFA is an acronym for present value interest factor of an ordinary annuity on which an interest of i% is due for n number of periods. The PVIFA may be better understood when you see it from a perpective of a borrower who has to repay loan amount of $X by making periodic end of period payments in amount of $1 each for n number of periods. The interest is paid not just on the loan amount but also on the interest that is paid in previous periods. The compounding frequencies of interest vary from annual compounding to daily compounding where a maximum amount of interest is due using continuous compounding of interest. Here I present you with a PVIFA document as a Word file that explains the topic in detail starting with defining the PVIFA, showing you various PVIFA formulas and illustrating PVIFA calculations using a number of compounding frequencies of interest.
Finding PVIFA in Excel
Up until Excel 2013, there weren't any financial functions in Excel to find the PVIFA - present value annuity factor or any other interest rate factor functions. In March 2012, tadXL add-in for Excel 2007, 2010, and 2013 was released to the software market that offered a large collection of financial functions to be used as worksheet cells in Excel spreadsheet program. One of these is the tadPVIFA function that finds present value annuity factor of periodic payments in amount of $1 for n number of periods earning i% interest rate. Options such as use of various compounding frequencies of interest, definition and use of payment periods of almost any length, and the use of discounting conventions such as mid-year discounting is allowed in finding present value annuity factor using tadPVIFA. There are related 18 interest factor financial functions in tadXL that have been around since 2012. Now as stated earlier Excel had none such financial functions and if Microsoft were to decide introduction of new financial functions in upcoming Excel 2015 or 2016 then more than likely that will be derivative work based and copied from tadXL add-in series of financial functions. I don't waste my time so somebody or other companies can make a buck off me so I reserve the rights to challenge any violation of my copy protected work if it were to be violated. Hope those in Redmond get to read this right.
Excel PVIFA function in tadXL v2.5
Using tadXL functions such as tadPVIFA finding present value annuity factor in Excel 2007, 2010 and 2013 becomes really easy. Let us now briefly look at this financial functions in tadXL to find PVIFA using Excel:
- tadPVIFA ( rate, nper, type, compounding, period, concentration )
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