The final cashback coefficient is the reciprocal of the present value coefficient of annuity, and the sinking fund coefficient is the reciprocal of the final value coefficient of annuity.

Its application examples are as follows:

If you know that the situation is "now", then how much cash flow will there be in the next few points, for example, there are 6,543,800 yuan in the bank now. If we want to give our son a fixed value to pay the tuition at the end of each year for the next five years, it is equal to. Now we invest 654.38 million yuan, and then use the recovery factor to recover a fixed amount of funds every year.

On the contrary, if we know the amount at a certain point in the future, let's find the annual cash flow from now to now. For example, you will spend 65438+ ten thousand in five years. Ask how much money you need to save at the end of each year from now on, which is equivalent to paying off a debt later.

Extended data:

Investment decision rules of payback period method

The company first determines a standard life or minimum life, and then compares the payback period of the project with the standard life. If the payback period is less than the standard life, the project is feasible; If it exceeds the standard life, it is not feasible.

The advantages of payback period method are simple calculation and easy understanding, and investment risk is considered to some extent (the longer payback period, the higher investment risk, and vice versa).

However, the payback period method has some fatal shortcomings: first, it does not consider the time value of funds and gives the same weight to cash flows in each period; Second, only consider the contribution of cash flow before the payback period to investment income, but not the cash flow after the payback period; Third, the determination of the standard period of investment payback period is subjective.

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