Capital recovery factor

A capital recovery factor is the ratio of a constant annuity to the present value of receiving that annuity for a given length of time. Using an interest rate i, the capital recovery factor is:

$CRF={\frac {i(1+i)^{n}}{(1+i)^{n}-1}}$

where $n$ is the number of annuities received.^[1]

This is related to the annuity formula, which gives the present value in terms of the annuity, the interest rate, and the number of annuities.

If $n=1$ , the $CRF$ reduces to $1+i$ . As $n\to \infty$ , the $CRF\to i$ .

References

↑ Calculator by Jenkins at University of California Archived July 8, 2006, at the Wayback Machine.

External links

Wolfram|Alpha Capital Recovery Factor Calculator

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[1] Calculator by Jenkins at University of California Archived July 8, 2006, at the Wayback Machine.