Week 6 PV & FV: Interest Factors & Tables

Present Value & Future Value: Interest Factors & Tables

In the equation for FV the term (1 + i)ⁿ is called the Future Value Interest Factor, FVIF. In the equation for PV the term 1/(1 + i)ⁿ is called the Present Value Interest Factor, PVIF. Values for these factors are contained in tables in most Finance and Investments texts, so you can simply look them up if you don't want to work out the formulas yourself. The tables can be found in the eReserves for this course.   

                

Sometimes it's easier to understand a problem if the formulas are written using FVIF or PVIF. If you do that the equations for FV and PV look like this:

FV=PV(FVIF_{i%, n periods})     Future Value of $1 Table Download Future Value of $1 Table

         

PV=FV(PVIF_{i%, n periods})     Present Value of $1 Table  Download Present Value of $1 Table 

Remember the algebraic and the interest factor versions of these equations solve for the same things. You can use whichever version you prefer.