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

1. Calculator by Jenkins at University of California

External links

Wolfram|Alpha Capital Recovery Factor Calculator