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:

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

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 ${\displaystyle CRF}$ reduces to ${\displaystyle 1+i}$. As $n\to \infty$, the ${\displaystyle CRF\to i}$.

References

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

External links

Wolfram|Alpha Capital Recovery Factor Calculator