Capital recovery factor

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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 goes to infinity, the CRF goes to i.

[edit] References

  1. ^ Calculator by Jenkins at University of California
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