Enter the final value ($) and the annuity rate (%) into the Reverse Annuity Calculator. The calculator will evaluate and display the initial principal amount. 

Reverse Annuity Formula

The following formula is used to calculate the Reverse Annuity. 

IV = FV / (1+AR/100)
  • Where IV is the Reverse Annuity ($)
  • FV is the final value ($) 
  • AR is the annuity rate (%) 

To calculate the initial value using reverse annuity, divide the final value by 1 plus the annuity rate.

How to Calculate Reverse Annuity?

The following example problems outline how to calculate Reverse Annuity.

Example Problem #1:

  1. First, determine the final value ($).
    • The final value ($) is given as: 1,000.
  2. Next, determine the annuity rate (%).
    • The annuity rate (%) is provided as: 5.
  3. Finally, calculate the Reverse Annuity using the equation above: 

IV = FV / (1+AR/100)

The values given above are inserted into the equation below and the solution is calculated:

IV = 1000 / (1+5/100) = 952.38 ($)

Example Problem #2: 

For this problem, the variables required are provided below:

final value ($) = 6,000

annuity rate (%) = 10

Test your knowledge using the equation and check your answer with the calculator above.

IV = FV / (1+AR/100) = ?