Present value factor


Also found in: Acronyms.

Present value factor

Factor used to calculate an estimate of the present value of an amount to be received in a future period. If the opportunity cost of funds is 10% over next year, the factor is [1/(1 + 0.10)].

Present Value Factor

An estimate of the present value of future cash flow for a project.
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The equation to use is: loss per month x present value factor = present value of loss.
The number of present value factors incorporated in the formula depends upon the number of years the taxpayer believes will be necessary to fully recover the carryover interest deductions.
Defining An as the present value factor of a fixed annuity lasting n periods and discounted by [Y.sub.e], the inverse is 1/An = [Y.sub.e]/(-1/Sn).
The notice also "provides guidance regarding the appropriate present value factors to be used for purposes of determining the basis recovery fraction of each payment received during phased retirement and provides guidance regarding the time for determining the basis recovery fraction for these phased retirement payments."