Capital Recovery Factor Calculator

Work out capital recovery factor instantly with clear inputs, formula shown and shareable results.

About Capital Recovery Factor Calculator

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.

Formula

Capital recovery

CRF = r(1+r)^n/((1+r)^n - 1); A = (C - S)·CRF + S·r

C: Cost
S: Salvage
r: Return
n: Life

Worked example

With the default values below, Capital Recovery Factor Calculator returns Capital Recovery Factor of 0.13269502. Change any input above and every figure here is recalculated in your browser.

Inputs used

Initial Capital Costminimum 0: 400,000
Salvage Value At End Of Lifeminimum 0: 40,000
Required Returnaccepts 0–100 %: 8 %
Useful Life In Yearsaccepts 1–60: 12

Results

Capital Recovery Factor: 0.13269502
Annual Capital Charge: $50,970.21
Total Charged Over Life: $611,642.47
Depreciation Element Per Year: $47,770.21

Step by step

1Values used
2Capital recovery
3Capital Recovery Factor= 0.13269502
4Annual Capital Charge= 50,970.21
5Total Charged Over Life= 611,642.47
6Depreciation Element Per Year= 47,770.21

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or compounding frequency into account.
Figures are rounded for display to 8 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Why add 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.

Where is this used?

To compare assets with different lives and to set internal hire or lease rates for plant.