Annual Annuity Rate Calculator

Calculate Annual Annuity Rate



Formula

The formula to calculate the Annual Annuity Rate (AAR) is:

\[ AAR = \left( \frac{PMT}{PV} \right) \times 100 \]

Where:

What is Annual Annuity Rate?

The annual annuity rate measures the return on an annuity investment over a year. It is calculated by dividing the annual payment amount by the present value of the annuity and then multiplying by 100 to convert it to a percentage.

Example Calculation

Consider an example where:

Using the formula to calculate the Annual Annuity Rate:

\[ AAR = \left( \frac{5000}{50000} \right) \times 100 = 10\% \]

This means that the annual annuity rate for this example is 10%.