Using the formula for calculating the PVIF, the calculation would be $10,000 / (1 + .05) ^ 5. The resulting PVIF figure from the calculation is $7,835.26.LinkedInwithBackgroundFinancialAnalysisHowtoValueaCompanyCorporateFinance&AccountingFinancialAnalysisWhatIsthePresentValueInterestFactor(PVIF)?Thepresentvalueinterestfactor(PVIF)isaformulausedtoestimatethecurrentworthofasumofmoneythatistobereceivedatsomefuturedate.PVIFsareoftenpresentedintheformofatablewithvaluesfordifferenttimeperiodsandinterestratecombinations.TheFormulaforthePresentValueInterestFactorIsPVIF=a(1+r)nwhere:a=The future sum to be receivedr=The discount interest rate\begin{aligned}&PVIF=\frac{a}{(1+r)^{n}}\\&\textbf{where:}\\&a=\text{Thefuturesumtobereceived}\\&r=\text{Thediscountinterestrate}\\&n=\text{Thenumberofyearsorothertimeperiod}\end{aligned}​PVIF=(1+r)na​where:a=The future sum to be receivedr=The discount interest rate​UnderstandingthePVIFThepresentvalueinterestfactorisbasedonthekeyfinancialconceptofthetimevalueofmoney.Thatis,asumofmoneytodayisworthmorethanthesamesumwillbeinthefuture,becausemoneyhasthepotentialtogrowinvalueoveragivenperiodoftime.Providedmoneycanearninterest,anyamountofmoneyisworthmorethesooneritisreceived.Presentvalueinterestfactorsareoftenusedinanalyzingannuities.Thepresentvalueinterestfactorofanannuity(PVIFA)isusefulwhendecidingwhethertotakealump-sumpaymentnoworacceptanannuitypaymentinfutureperiods.Usingestimatedratesofreturn,youcancomparethevalueoftheannuitypaymentstothelumpsum.Thepresentvalueinterestfactormayonlybecalculatediftheannuitypaymentsareforapredeterminedamountspanningapredeterminedrangeoftime.KeyTakeawaysPresentvalueinterestfactors(PVIFs)areusedtosimplifyacalculationofthetime-valueofasumofmoneytobepaidinthefuture.Presentvalueinterestfactorsarecommonlyusedinanalyzingannuities.Presentvalueinterestfactorsareavailableintableformforreference.ExampleofthePVIFHereisanexampleofhowtousethePVIFtocalculatethepresentvalueofafuturesum:Assumeanindividualisgoingtoreceive$10