present value interest factor of annuity (PVIFA)

Definition

A factor used to determine the present value of annuities by taking into account cash flows and depreciation. Present value interest factor of annuity is also frequently used to ascertain the current value of standard annuities. For example, if you make a large purchase or take out a loan, present value interest factor of annuity is a method of determining your payments.

The equation for present value interest factor of annuity is: PVIFA = 1 - (1 + r) - N / r
Where: r = period rate, N = payments or withdrawals
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present value present value interest factor (PVIF)