PVIF and PVIFA Definition
Some terms and quantities have great importance, especially in business Mathematics. It is important to perform some calculations before you invest your valuable money anywhere or in any business.
PVIF and PVIFA are considered to be the most worthy terms or methods to do this task. In this article, we are going to show you what these quantities are and how they can help you. Also, we will show you what is the major difference between them. Let’s get started and explore the following sections.
Table of Contents
What is PVIF?
PVIF stands for Present Value Interest Factor which shows what will be the value of your current money after a few years from now. It determines whether it is good to invest your money in your concerned business or if you need to find other opportunities.
This quantity shows how much you will get in return after investing your current money. In simple words, it gives you an idea about what will interest you will get after a specified period.
What is PVIFA?
PVIFA stands for Present Value Interest Factor for Annuity. As the name shows, it concerns the interest value with the involvement of an annuity. The procedure to find this value is the same as PVIF but it needs a few more entries in the form of annuity details.
Difference between PVIF and PVIFA
PVIF and PVIFA are both related to the interest value factor with a minor difference. There is not even a single major difference between them because both are based on the same concept. These quantities are based on the “Time Value of Money” concept.
It is a particular concept that tells the users the money they have in their hands is more worthy than the money with the same amount they will have after a specific time. The only difference between PVIF and PVIFA is the involvement of the annuity.
In the first quantity, you don’t have to worry about annuity but you only need to insert basic details to find its value. In the later one, you will need to specify the annuity and how many annuities you are going to get. Without specifying this, you can’t find the value of PVIFA.
Doesn’t matter whether you want to do this manually or looking to use a PVIFA calculator, you have to keep the basic details along with you. Without doing this, neither a tool nor software can help you in this regard.
Is there any similarity between PVIF and PVIFA?
Yes, PVIF and PVIFA are considered the same quantities with the involvement of a specific section. You can find their values using the same approach. It will be pretty simple to solve such problems because you don’t have to follow a complex process.
You only need to get basic details and put them in the given formula. After that, you have to perform basic Mathematical operations. If you are unable to do this, you can also choose a PVIF calculator. It is a particular tool that has been designed for this purpose only.
The tool has a particular algorithm that has been designed to work in this particular way. By inserting values into this tool, you don’t need to do anything but copy the answer at the end.
In the above blog, we have discussed the difference between PVIF and PVIFA side by side. You must have got an idea about them comprehensively. To find any of these values, you can use a PVIFA calculator or use the basic formula for a manual approach.