The present value interest factor for i percent and n periods is the inverse of the future value interest factor for k percent and n periods.

Question

Quizplus · Accepted Answer

This statement is true according to the basic principles of time value of money. The formula for calculating the present value interest factor (PVIF) is the reciprocal of the formula for calculating the future value interest factor (FVIF). Specifically, PVIF = 1 / (1+i)^n and FVIF = (1+k)^n. Therefore, PVIF for i percent and n periods is the inverse of FVIF for k percent and n periods.

The Present Value Interest Factor for I Percent and N