# PVIFA Calculator

Calculate the present value interest factor of annuity using our PVIFA calculator.

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## PVIFA:

Learn how we calculated this below

## How to Calculate the Present Value Interest Factor of an Annuity

When determining how much a non-speculative investment, such as an annuity, is actually worth, one of the first things you will need to figure out is that investment’s present value. And to do this, you’ll need to know the present value interest factor of an annuity (PVIFA).

The present value of an investment accounts for the time value of money, which recognizes that having any amount of money today will be more valuable than having that exact same amount of money in the future.

### PVIFA Formula

To determine the present value interest factor of an annuity, use this simple formula:

PVIFA = \frac{1 − (1 + r)^{−n}}{r}

Where:
PVIFA = present value interest factor of annuity
r = rate per period
n = number of periods

For example, let’s say you’re considering investing in an annuity that pays 5% interest for 10 years, what is the PVIFA?

PVIFA = \frac{1 − (1 + 0.05)^{−10}}{0.05}
PVIFA = \frac{1 − 1.05^{−10}}{0.05}
PVIFA = \frac{1 − 0.6139}{0.05}
PVIFA = \frac{0.3861}{0.05}
PVIFA = 7.722

So, the present value interest factor of this annuity is equal to 7.722. This means that every dollar received in future payments would be worth \$7.722 today.

While there are many factors you will want to keep in mind when deciding whether to invest in an annuity, the present value interest factor of an annuity formula and calculator make it easy for you to decide whether investing in an annuity is right for you.

Then, you can use an annuity payout calculator to make it easier to determine what an annuity will be worth in the future.

By taking a moment to calculate the PVIFA, you will be able to decide whether investing in an annuity is better or worse than investing in other future income options.
And, by taking the time to calculate the future value of an annuity, you can accurately predicate just how valuable investing in an annuity might be.