Enter the annual payment amount and the present value of the annuity into the calculator to determine the annual annuity rate. This calculator can also evaluate any of the variables given the others are known.
Aar Formula
The following formula is used to calculate the annual annuity rate.
AAR = (PMT / PV) * 100
Variables:
- AAR is the annual annuity rate (%)
- PMT is the annual payment amount ($)
- PV is the present value of the annuity ($)
To calculate the annual annuity rate, divide the annual payment amount by the present value of the annuity. Then, multiply the result by 100 to convert it to a percentage.
How to Calculate Aar?
The following steps outline how to calculate the Annual Annuity Rate (AAR).
- First, determine the annual payment amount (PMT) ($).
- Next, determine the present value of the annuity (PV) ($).
- Next, use the formula AAR = (PMT / PV) * 100 to calculate the Annual Annuity Rate.
- Finally, calculate the Annual Annuity Rate.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge.
Annual payment amount (PMT) ($) = 500
Present value of the annuity (PV) ($) = 10000
