# Present Value Interest Factor of Annuity (PVIFA).

The Present Value Interest Factor of Annuity (PVIFA) is the factor used to determine the present value of an annuity. The PVIFA is used to discount the future payments of an annuity to their present value. The PVIFA is a function of the interest rate and the number of periods in the annuity.

The PVIFA is calculated as:

PVIFA = 1 - (1 / (1 + i)^n)

where:

i = interest rate

n = number of periods

### How do you calculate annuity interest rate?

Assuming you are referring to an annuity's internal rate of return (IRR), you would calculate it the same way you would calculate the IRR for any other investment.

To calculate an annuity's IRR, you would first need to determine the cash flows associated with the annuity. For an annuity that pays out a fixed amount each period, the cash flows would simply be the periodic payments.

Once you have the cash flows, you can then use a financial calculator or spreadsheet program to calculate the IRR.

For an annuity, the IRR is effectively the interest rate that would make the present value of the periodic payments equal to the initial investment.

So, if you invest \$100 in an annuity that pays \$10 per period, the IRR would be the interest rate that would make the present value of the periodic payments (\$10) equal to the initial investment (\$100).

In this case, the IRR would be 10%. What is PV factor in accounting? PV factor is the present value of an annuity. It is used to calculate the present value of a stream of payments. What is present value of an annuity? The present value of an annuity is the present value of a stream of equal payments made at regular intervals. The present value is the sum of the present values of each payment. What is the 2 year annuity factor if the required rate of return is 10%? Assuming that the required rate of return is 10%, the 2 year annuity factor would be 1.818. This means that for every dollar you invest today, you would receive 1.818 dollars back at the end of the 2 year period. How do you find the cumulative present value factor? To find the cumulative present value factor, you need to first calculate the present value factor for each individual payment. The present value factor for an annuity is:

PV Factor = 1 / (1 + i)^n

Where:

PV Factor = present value factor
i = interest rate
n = number of payments

So, for example, if you have an annuity with 10 payments of \$100 each at an interest rate of 5%, the present value factor for each payment would be:

PV Factor = 1 / (1 + 0.05)^10

= 0.6139

To find the cumulative present value factor, you simply need to multiply the present value factor for each payment together. In the example above, the cumulative present value factor would be:

Cumulative PV Factor = 0.6139 x 0.6139 x 0.6139 x 0.6139 x 0.6139 x 0.6139 x 0.6139 x 0.6139 x 0.6139 x 0.6139

= 0.3821

This means that the present value of the annuity would be \$380.21.