Processing math: 100%

Reverse Interest Calculator

Formula

To calculate the principal amount:

$P = \frac{A}{(1 + r)^n}$

Where:

$P$ is the principal amount (\$)
$A$ is the accumulated amount (\$)
$r$ is the interest rate per period (decimal)
$n$ is the number of periods

Reverse Interest Definition

A reverse interest is a process of calculating a principal amount on an investment or loan given the accumulated amount, interest rate per period, and a number of periods.

Example Calculation

Let's assume the following values:

Accumulated Amount $A$ = \$1000
Interest Rate per Period $r$ = 0.05
Number of Periods $n$ = 10

Step 1: Calculate $(1 + r)^n$ :

$(1 + 0.05)^{10} = 1.62889$

Step 2: Divide the accumulated amount by the result from step 1:

$P = \frac{1000}{1.62889} = 613.91$