Squircle: Difference between revisions
Jump to navigation
Jump to search
en>AnonMoos Undid revision 506608157 by 24.60.55.202 (talk) |
en>Modest Genius |
||
| Line 1: | Line 1: | ||
A '''capital recovery factor''' is the ratio of a constant [[annuity (finance theory)|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: | |||
<math> CRF = \frac {i(1+i)^n}{(1+i)^n-1}</math> | |||
where <math>n</math> is the number of annuities received.<ref>[http://faculty.engineering.ucdavis.edu/jenkins/CBC/Calculator/CalculatorBackground.pdf Calculator by Jenkins at University of California]</ref> | |||
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 <math> n = 1</math>, the <math>CRF</math> reduces to <math>1+i</math>. As <math>n \to \infty</math>, the <math>CRF \to i</math>. | |||
==References== | |||
<references/> | |||
==External links== | |||
[http://www.wolframalpha.com/entities/calculators/capital_recovery_factor_calculator/tq/pq/5l/ Wolfram|Alpha Capital Recovery Factor Calculator] | |||
[[Category:Financial ratios]] | |||
Revision as of 18:38, 7 January 2014
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:
where 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 , the reduces to . As , the .
