• 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) = ?