How Do You Calculate Reverse Percentage?

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Reverse percentage can be calculated by dividing a known amount by 1 minus the discount rate or 1 plus the tax rate. Such calculations are helpful in determining the original price of a sale item purchased or the pretax price of a transaction already done.

For example, consider that Greg wants to purchase a television for $300 that he knows is 20 percent off the original price. By dividing this sale price ($300) by 1 minus the discount rate (.80), he learns that the price was $360 before the markdown. Likewise, if he knew that the television cost $315 after tax (at a tax rate of 5 percent), he could determine the sticker price ($300) by calculating 315/1.05.