Work out capital recovery factor instantly with clear inputs, formula shown and shareable results.
The capital recovery factor turns a lump-sum investment into the level annual charge that repays the capital and earns the required return. With a salvage value the charge is (C − S)·CRF + S·r, the standard engineering-economics form.
Capital recovery
CRF = r(1+r)^n/((1+r)^n - 1); A = (C - S)·CRF + S·r
The salvage value stays tied up in the asset for the whole life, so it must still earn the required return each year.
To compare assets with different lives and to set internal hire or lease rates for plant.