# FVIF TABLE PDF

Table 1: F uture Value Interest F actor (F. V. IF.) ($1 at r% for n periods). F. V. IF. ( 1+r) n. ; F. V PV (F. V. IF r,n.) n/r. 1%. 2. %. 3%. 4. %. 5%. 6. %. 7%. 8. %. 9%. Present Value and Future Value Tables. Table A-1 Future Value Interest Factors for One Dollar Compounded at k Percent for n Periods: FVIF k,n = (1 + k) n. Present value and Future value tables. Visit worldcreation.info for practice questions, videos, case studies and support for your CPA studies.

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PVIF Table - Download as PDF File .pdf), Text File .txt) or read online. 1, Future value interest factor of $1 per period at i% for n periods, FVIF(i,n). 2, Period, 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10%, 11%, 12%, 13%, 14%, 15% . Jun 27, Future value interest factor, FVIF(i,n) Period 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 1.

Interest Rate per Year.

The present value interest factor PVIF is used to simplify the calculation PVIF tables often provide a fractional number to multiply a specified Secara aljabar, formula. FVAn adalah If interest rates rise to Example: Find the amount of an Using a financial Financial Management ; Jan 1, PowerPoint slides plus PDF's of all figures and tables from the book Figure 3. Pvifa Chart Note that pvif table PV function is only used pvif table the upper-left Time value of money tables are very easy pvif table use because they Pvifa Chart.

Present Value and Future Value Tables. This will pvit the following dialog box:.

This flexibility is achieved using standard Excel features such as time value of money functionstwo-input data tables, data validation, and conditional formatting. The value today of a dollar to be received tomorrow 2. We learn that the more compounding periods per year, the greater the amount of the accumulated prin- cipal plus [reinvested] interest. The most complex scenario is when we have multiple compound periods per year i.

Most keys have two functions. Contents of memory registers can be checked using the RCL recall key. Several function keys open mini-spreadsheets for data entry; 1. Several Function keys provide outputs based on pre-programmed functions and related data entry.

QUIT: to leave sub-routine mode. Row 3 contains the Time Value of Money keys and related second functions. AMORT: compute principle, interest, and balance worksheet mode. CLR Work: clear mini-spreadsheet data registers. Calculators maintain contents in memory registers until erased.

To reset decimal places: [2nd] [. This insert takes you step by step through a calculation. It also shows how to reset the calculator. Interest may be paid semi-annually, quarterly, monthly, weekly, or daily. When there is more than one interest period per year; a. The number of compounding periods per year fixes the periodic interest rate. When the interest earning period is less than one year; 5.

Sinking funds are associated with corporate bond issues. A retirement plan is a systematic savings plan with certain tax ad- vantages. Both plans require regular deposits. These funds are then invested in marketable secu- rities i. A large proportion of retirement funds is invested in mutual funds.

Insurance annuities are used to provide a fixed payment of money for a predetermined period of time. Some financial planners suggest downloading these plans in order to assure a regular payment from the retirement plan accumulation. We make a distinction between receipts positive values and deposits negative values.

We define receipts as positive cash flows; i. We define deposits as negative cash flows; i. Later on, we will use the financial calculator to compute various items of interest. It is important to understand that cash flowing away from us is treated as a negative cash flow while cash flowing to us is a posi- tive cash flow. In this section we determine; 1.

The price we must pay PV to receive a certain amount of income. How much we will accumulate given a rate of interest assumption 4. Annuitize the accumulation and determining the amount of the payout. Annuities 1. The present value of the payments to be received is the price of the insurance annuity. Types of Annuities: 1. Ordinary Annuity: payments received at end-of-period.

We use the "BEGIN" function when we assume depos- its or receipts occur on the first day of the interest period rather than the last; an Annuity Due. The effect is an extra period of interest to compound or discount. An annuity is series of equal deposits contributions over some length of time. Contributions are invested in financial securities; stocks, bonds, mutual funds. The future value of accumulation is a function of the number and magnitude of contributions, reinvested interest, dividends, and undistributed capital gains.

The future value of an accumulation FVA formula; 5. Assume: steady growth rate over time and equal dollar amount contributions. First set the calculator to 5 decimal places using the Format function.

If these values are already stored, then quit subroutine. Enter , press Enter Don't clear the values yet. We're going to use them in the next problem. We can re-enter a new val- ue for any variable and compute the desired variable.

In this example we are going to compute the FVA given a change in the time period for the accumulation. How much will the FVA be after 30 years of monthly savings?

Enter 30, press [2nd N], then press again.

We use the calculator to compute how many months are in 30 years You must press the to save this value. The total deposits are What effect does the rate of return have on the size of the accumulation? Other Types of Retirement Savings Plans; 1. SEP plans; plans fore the self-employed.

Keough Plans; for professionals such as doctors and lawyers. Current tax law permits the annuitization of IRAs and other similar plans at age 59 years and 6 months. Annuitiza- tion of plans must commence when a person reaches 70 years and 6 months. Annuitizing an accumu- lation is the reverse process.

Now instead of paying into the retirement plan, the plan will make payments to you. Pension Fund Payoffs; i. Endowment Fund Payoffs; from insurance contracts. Computing the amount of the payout requires three items of information; The initial amount invested in the fund.

Payments will be made from this amount. The expected rate of return the fund will earn during the payout period. The number of years months the payout is to run. How much will the monthly payment be? Calculating the Payout Amount Using Formulas; 1. Calculating the Payout Amount Using Financial calculator; 1. Enter and press the key. Obviously this is an example and is predicated on earning a fixed rate during the accumulation and payout phases of this plan.

Accumulations and payout benefits will vary depending on your assumed rates and contribution amounts. The moral of this story is quite simple; the accumulation of wealth takes time and self- discipline. The trick is to start early and keep it going.

How much must we pay for an annuity con- tract that will pay a fixed amount for a fixed length of time?

## how to calculate pvifa in excel

Pricing an annuity contract when the payment is known; a. Clear the TVM registers. Enter and press Enter and press [PMT].

The negative sign reminds us that this is a price negative cash flow.

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Enter 5, press [2nd] ; then Enter 9. What would the monthly payment be if you finance for 48 months? How much of the first payment is interest and how much is principal? Automobile Leases and the Implied Borrowing Rate.

Consumers have been leasing cars and sport utility vehicles with increasing frequency in recent years. Leasing of personal autos is an alternative to bank financing.

In essence, the dealer borrows the money to sell you the car and then you make the payments. Not so obvious in this scheme is the fact that the dealer frequently grosses up 9 the borrowing rate when computing the necessary monthly lease payment.

## Fundamentals of Financial Management, Third Edition by Vyuptakesh Sharan

Most newspaper adver- tisements inform you of: 1. The monthly payment, the cash up front required sometimes referred to as the capital re- duction fee , the number of months for the lease and 3. The end-of-lease EOL payment required if you choose to download the car.

Knowing what you are paying in the way of lease financing is an important step in becoming a knowledgeable consumer. Later we will learn to use the [CF] key to enter cash flows for a capital investment problem. Funds invested today grow and compound as the interest previously earned earns more inter- est. Funds to be received in the future must be discounted to compare their value to funds re- ceived today.

There are four TVM cases: the future value of a dollar, the present value of a dollar, the fu- ture value of an annuity, and the present value of an annuity.

An annuity is a series of equal, annual payments. If the payments are received at the end of the time period, the annuity is referred to as an "ordinary annuity. The frequently encountered APR annual percentage rate is a good example of this concept. Loan rates are generally quoted as per annum rates. Since consumer loans are amortized on a monthly basis, the Truth in Lending Act requires lenders to reveal the effective rate actually paid on a loan.

Press [2nd] [ 2 ] I Conv. The 1. It is likely to be one of the best investments you'll make as a student.

## PVIF Table

Homework Assignments A. Self-Test: ST-1, c, f, i, j B. Questions: , , C. Problems: , , , , 10 X. Obviously, it is faster to use a calculator. However, you should be able to compute the answers by manual methods. How much interest income will you earn? Your investment plan earns 4. His idea is to download an insurance annuity that will provide him with a steady, guaranteed income should he desire to retire early. You consult an actuarial table and estimate that a person retir- ing at age 60 can expect to live another 25 years.

The insurance annuity plan will make monthly payments and will guarantee 5. How much will those monthly payments? You are interviewing for a job as a bank financial analyst and the interviewer wants to test your ability to analyze a mortgage problem.

She gives you the following information. The interest rate is 6. How much is the monthly payment? Prepare a partial Amortization table for payments 1 through 3 below for the loan described in question 7. Before you start: The gray 2nd key activates the functions that appear above the calculator buttons.

Another clearing option is to press 2nd and Reset. It will reset the calculator to its original settings. Data Entry Most of the data entry will be value first, then the function. Be careful to make sure your entry has been acknowledged by the calculator.

Payments are cash outflows and may appear as negative - depending on the calculator used. What is the effective rate?

The display will go to 0. The field NOM will appear. Press CPT and the calculator will return the effective rate of 8. Press 2nd and QUIT. Press 5. Press N again. Press and then the PV key. A sinking fund is a series of payments leading to an accumulation. Examples are IRA and K programs. Problem: You want to retire in 30 years. How much will you have in 30 years? Press Press N. This will change the sign of the from positive to negative.

The display should be Next press PMT. Sample Problem 4: Special Case of the Annuity Problem - Amortization An amortization is a payment to pay down a loan that has been made in the present.

What will your monthly payments be? Press 7. Press , and then press PV. Cost of Credit A. Interest rates reflect the cost of borrowing money or capital B. Four Principal Factors Influencing Rates 1. Investment opportunities 2. Time preferences for consumption 3. Riskiness of objectives 4. Inflation C. Other Factors Influencing Interest rates. Federal Reserve Monetary Policy.

Investor expectations about economy. Business Decisions. Normal Yield Curve: relation between time or risk x-axis and return y-axis 1.

Upward sloping to the right 2. The higher the risk, the greater the required rate of return B. Inverted Yield Curve 1. Downward sloping to the right 2. When short-term risk or inflation is greater than longer term levels.

Composition of Nominal Interest Rates. Real rate of return. Inflation premium. Default premium. Liquidity premium. Maturity Risk premium D. Self-Test: ST-1, parts b, c, d, e, f F.

Questions: , , , G. Indenture Agreement, 1. Loan contract between lender and company. Appoints the trustee; a fiduciary responsible for guarding the lenders' interests. Terms and conditions, legal remedies. Sources of risk 1. Bonds require the borrower to make periodic payments interest and to repay the principal at some specified date in the future the maturity date.

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Corporations issue various types of bonds. Some are secured by liens on specific property mortgage bonds and equipment trust certificates , and other bonds are unsecured deben- tures which are backed only by the creditworthiness of the firm.

Convertible bonds allow the bond investor to exchange the bonds for the company's common stock. Bondholders will do so if it be- comes profitable to convert, otherwise they can continue to enjoy reasonably high interest income. Mortgage bonds: bonds secured by real property B. Equipment trust certificates: bonds secured by equipment rolling stock C. Debentures: unsecured bonds no collateral. Income bonds: interest paid only if a specified level of earnings is achieved E.

Convertible bonds: bonds that may be converted into the firm's common stock F. Variable interest rate bonds: coupons that change with changes in interest rates G. Zero coupon bonds: 1. Do not pay coupons. Eurobonds: bonds issued abroad denominated on dollars or other currency.

Bond prices fluctuate with changes in interest rates. When interest rates rise, bond prices fall and vice-versa.

The current price of a bond depends on how much interest it pays, how long before it matures, and what investors can earn on comparably risky bonds. The bond valuation formula implicitly assumes that all future cash flows i.

When this assumption is violated, then the value of bond is different from the theoretical value the calculated PV. Inverse relationship between a bond's price and interest rates; 16 3. YTM go up bond prices go down and vice-versa. If the company gets riskier, then YTMs go up, prices down and vice-versa. This yield does not consider changes in the bond's price that may occur if the bond is held to maturity.

If the bond is held to maturity, the total return is de-fined as the yield to ma- turity, which considers not only the current price but whether the bond is selling for less than face value i.

If prices are bid up, YTMs are forced down and vice-versa. Bonds downloadd at discount below par value accrue a capital gain in addition to the coupon. The capital gain makes the YTM greater than the current yield. If bonds are downloadd at a premium above par value , then the capital loss makes the YTM less than the current yield.

Investors download the YTM on bonds. As bonds approach their maturity date, the current yield and the yield to maturity converge; become nearly equal. At ma- turity, the YTM is identical to the bond's coupon rate.

Bonds issued with varying maturities are called serial redemption bonds. Corporations do not always retire their long term debt; they roll it over instead. Most companies sell new bond issues and use the proceeds to pay off the maturing issue. Some bond issues have a sinking fund provision in the indenture agreement which re-quires that the firm set aside a sum of money each year to retire the bonds at maturity.

Corporations may also retire bonds by calling them if the bonds have a call feature or repur- chasing the bonds in the secondary market. Bonds will be called only if interest rates have fallen and the firm can refinance the debt at lower interest rates. Companies desiring to permanently reduce their LTD may wait for interest rates to rise and then redownload the bonds at a discount; the firm can retire the debt for less than its face value and hence realize a gain on the redownload.

However, when the indenture agreement so specifies, corporations may repay the debt as follows; A. Serial Redemption Bonds; called by lottery for repayment. Sinking funds; Companies regular deposits into trust fund to accumulate FV C. Other Possible Strategies; 5. The companies may redownload debt in the secondary bond market; especially if in- terest rates have risen, reducing market values of their bonds.

The companies may issue callable debt; early redemption with additional premium. If interest rates drop, firms reduce interest expense by refunding the existing bonds. State and local governments also issue bonds. The interest paid on state and local gov- 17 ernment bonds is currently exempt from federal income taxation. The interest paid on treasuries is exempt from local taxation. Federal government bills and bonds 7. Interest is taxable by Federal Government but non taxable by State Governments.

Price Quotations different from corporate bonds. Tax-exempt municipal bonds 9. The Pre-Tax Equivalent Yield; compare to taxable yields. Interest not taxable by Federal Government. If the current yield rates are 9 percent, how much should this bond sell for? Self-Test: ST-1, par value, e, h B.

Questions: , , , C. Problems: , , part a 18 19 IX. What is the purpose of the indenture agreement? What are the principal sources of risk when investing in bonds? What is the difference between a mortgage bond and a debenture bond? Be able to compute bond prices and describe effects of YTM changes on prices.

What is the difference between a current yield and a yield-to-maturity? An years until maturity corporate bond pays an 8. What is the yield to maturity YTM of the bonds?

If the bonds in question 6 are priced to yield 9. Investment Risk A. Investment risk is related to the probability of earning a low or negative actual return.

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The greater the chance of lower than expected or negative returns, the riskier the investment. Risk is measured as a probability distribution 1. Standard deviation s 3. Treasury bills 3. Analysis of Standard Deviations A.

Standard deviation si measures total, or stand-alone, risk. The larger si is, the lower the probability that actual returns will be closer to expected returns.

Larger si is associated with a wider probability distribution of returns e. Standard deviations are scale sensitive. Scale-Free Measure of Risk A. Coefficient of variation CV : A standardized measure of dispersion about the expected val- ue, that shows the amount of risk per unit of return.

Average Standard Coeff. Investor Attitude Towards Risk A. Investors are assumed to be risk averse. Risk aversion — assumes investors dislike risk and require higher rates of return to encourage them to hold riskier securities. Risk premium — the difference between the return on a risky asset and a riskless asset, which serves as compensation for investors to hold riskier securities. Managing Investor Risk A. Primary Strategy to Manage Risk 1. Holding a diversified portfolio of securities Stocks common, preferred, foreign Bonds treasury, municipal, corporate Mutual Funds Growth, Income, Balanced, etc.Payback Period 1.

How much will those monthly payments? The future value of accumulation is a function of the number and magnitude of contributions, reinvested interest, dividends, and undistributed capital gains. Reduction in outstanding shares makes shares more expensive. The preferred is the [implied] cost of new capital. Investment risk is related to the probability of earning a low or negative actual return. Preferred stocks are riskier than bonds 4.

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