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Capital Recovery Factor Calculator

Just enter an interest rate and number of years to instantly get the capital recovery factor. Add a principal to also see the annual payout (principal x factor), plus its relationship to the present value annuity factor (its reciprocal).

Input

%
yrs
$

Enter a principal to also calculate the annual payout (principal x factor).

Result

Capital recovery factor (rate 3%, 20 yrs)

0.067216

Capital recovery factor

0.067216

Present value annuity factor (reciprocal)

14.877475

Annual payout

$2,016,471.23

Drawing down $30,000,000.00 over 20 years while earning 3% lets you withdraw about $2,016,471.23 each year.

How it works

  • The capital recovery factor is calculated as r(1+r)^n / ((1+r)^n - 1), where r is the interest rate as a decimal and n is the number of years. It is the multiplier for how much you can withdraw each year when drawing down a lump sum over n years.
  • When the rate is 0%, the denominator of the formula would be zero, so it is handled specially as 1 / n (the same as simply dividing the principal into n equal parts).
  • Enter a principal and the tool shows the annual payout as principal x capital recovery factor, expressed in currency.
  • The reciprocal of the capital recovery factor is the present value annuity factor, which represents the present value of the right to receive one unit of currency each year for n years.
  • Use it to estimate how much to draw down from savings over a fixed period after retirement, or the annualized cost of a capital investment spread over its useful life.
  • Note: this is an estimate that assumes a constant rate of return. Actual payouts vary with investment performance, taxes, and inflation, so treat the result as a guide.