Role: invest a sum of money now, and how much will be recovered at the end of each period.
Formula: a = p/(p/a, I, n)
Capital recovery coefficient is also called "investment recovery coefficient" or "capital recovery coefficient". The ratio of annual recovery to investment under the condition of compound interest within the scheduled recovery period.
On the premise of fixed interest rate and term, how much money should be recovered each year to recover a fixed amount of original investment, and its value can be found from the discount table of the evaluation project according to interest rate and service life.
In essence, the investment recovery coefficient is the conversion coefficient from the present value of investment to the present value of annual annuity in a predetermined period, which is widely used in the calculation of investment or loan recovery.
Expand the information to know the final value of the annuity and use the sinking fund coefficient; Know the present value to calculate the annuity and use the capital recovery coefficient.
Sinking fund is the inverse operation of ordinary annuity's final value formula, and the capital recovery and the present value of ordinary annuity are the inverse operations. If you know the final value, you can calculate the annual receipt and payment amount, that is, you can calculate the sinking fund. If the present value is known, calculate the annual income and expenditure, that is, the annual capital recovery.
For example, if someone wants to pay off 10000 yuan after five years, it is required to deposit the amount at the end of each year from this year. This is the known final value, that is, the amount of the annuity after 5 years is 10000, which is the calculation of the sinking fund.
References:
Baidu Encyclopedia-Capital Recovery Coefficient