FinanceToggleDropdownAccountingEconomicsAuditManagementComputersStatisticsAccountingFinanceEconomicsAuditManagementComputersStatisticsForumAboutCFA®PrepForumInthischapter(taptoexpand)TimeValueofMoneyNominalInterestRateRealInterestRatePresentValuevsFutureValueTimeValueofUnevenCashFlowsFindingAnnuityPaymentTypesofInterestRatesQuotedvsPeriodicInterestSimplevsCompoundInterestSimpleInterestCompoundInterestPresentValueFactorFutureValueFactorInterestvsDiscountNegativeAmortizationMoneyMarketYieldBondEquivalentYieldGrowingAnnuityPVofOrdinaryAnnuityPresentValueofAnnuityDueFVofOrdinaryAnnuityPresentValueofaPerpetuityFutureValueofAnnuityDueFVwithContinuousCompoundingLoanAmortizationTotalInterestFindingInterestRateTimePeriodsinTVMEffectiveInterestRateAnnualPercentageRateAmortizationSchedulePVofaSingleSumofMoneyPresentValueofanAnnuityFVofaSingleSumFutureValueofanAnnuityCompoundAnnualGrowthRateDefinitionFormulaExamplereportthisadHomeFinanceTVMPresentValueFactorPresentValueFactorPresentvaluefactor(PVF)(alsocalledpresentvalueinterestfactor(PVIF))istheequivalentvaluetodayof$1infutureoraseriesof$1infuture.Atableofpresentvaluefactorscanbeusedtoworkoutthepresentvalueofasinglesumorannuity.Therearemultiplewaystofindpresentvalueofasinglevalueoranannuity:usingthepresentvalueformula,usingMicrosoftExcelPVfunction,usingsomefinancialcalculatororusingpresentvaluetables.Presentvaluetableslistpresentvaluefactorformultipleinterestratesandtimeperiods.Theinterestratesarenormallylistedinthetoprowandtimeperiodsaretabulatedinthefirstcolumnandweneedtofindthevaluethatisattheintersectionofourgiveninterestrateandtimeperiod.FormulaPresentvaluefactorofasinglesumisgivenbythefollowingformula:PVFofaSingleSum=1(1+r/m)(n×m)Presentvaluefactorofanordinaryannuitycanbeworkedoutbythefollowingformula:PVFofanAnnuity=1−(1+r/m)-(n×m)r/mTherelationshipbetweenpresentvaluefactorofanordinaryannuityandanannuitydueisexpressedbelow:PVFofAnnuityDue=PVFofAnnuity×(1+r/m)Whereristheannualpercentageinterestrate,nisthenumberofyearsandm