PVIF Excel Function
Written by:Abraham A.What is PVIF
Assume you have borrowed an amount of $X from a bank that charges compound interest of i% for n periods. You have to repay the principal and interest in amount of $1. PVIF will be the amount of money you borrowed for which you must return $1 after n periods at an interest rate of i%.
Compound Interest
As stated earlier compound interest is the interest paid on a loan plus interest on interest. Compounding of interest may be either discrete or it may be continuous compouding. When interest is calculated per period such as per year, per quarter, per month or per day then it is referred to as periodic or discrete compounding of interest. Yet modern banking permits calculation of interest on continuous scale, this is referred to as continuous compounding of interest. Excel functions only provide results when interest is compounded discretely.
PVIF MS Excel Example
This article http://support.microsoft.com/kb/141695 from Official Microsoft Excel Support states that "Microsoft Excel does not include a function for determining compound interest".
The Solution
tadPVIF Excel function calculates loan principal for which one has to repay an amount of $1 using either discrete or continuous compounding of interest. No VBA programming required. tadPVIF Excel function is part of the TADXL Excel add-in for finance, that provides numerous financial functions that are not currently available in Excel. tadPVIF accepts the following three values
- RATE
refers to the periodic interest rate - NPER
refers to the number of periods - Compounding
refers to either 0 for discrete compounding of interest or to 1 for continuous compounding of interest
| A | B | C | |
| 1 | RATE | 7% | 7% |
| 2 | NPER | 10 | 10 |
| 3 | Compounding | 0 | 1 |
| 4 | TADXL | =tadPVIF(B1, B2, B3) | =tadPVIF(C1, C2, C3) |
| 1 | PVIF | 0.50835 | 0.49659 |
You can try out the sample PVIF calculation in Excel as shown in the previous example. If Excel reports the #NAME error when you enter the =tadPVIF(B1, B2, B3) function in cell B4, then you must install TADXL Add-in for finance to see the results of loan principal calculation using tadPVIF function. TADXL is an Excel Add-in for finance, that contains many financial functions which are not provided by Excel. Go ahead and download TADXL now.
Related Interest factors Excel functions
Following is a list of related Excel functions that cover other interest factors used in financial management:PVIF Calculator
You can opt to use this PVIF Calculator that calculates not only PVIF but also the interest rate and number of periods from present value interest factor. The PVIF calculator permits you to select from discrete and continuous compounding of interest.
PVIF Table
Get yourself a PVIF PDF download file that tabulates present value interest factor of a $1 at interest rates ranging from 1% to 50% for number of periods ranging from 1 to 50. The PVIF table comes in an easy to read format where alternating rows are highlighted in contrasting colors. A must have for any financial analyst, business student, and other accounting professionals.
PVIF on ba ii plus
TI BA II plus is a popular financial calculator manufactured by Texas Instruments. PVIF on BA II plus may be found using the time value of money function keys. This tutorial guides you on how to find PVIF on BA II plus.