Capital recovery factor This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "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:
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.
