How to Calculate and Solve for capital recovery | Equal Payment Series | Economic Equivalence

Last Updated on April 6, 2024

The image above represents capital recovery. To calculate capital recovery, three essential parameters are needed and these parameters are Present Amount or Worth (P), Interest Rate (i) and Number of Years (N).

The formula for calculating capital recovery:

A = P[i((1 + i)^N)] / [((1 + i)^N) – 1]

Where:

A = Annual Worth or Amount
P = Present Worth or Amount
i = Interest Rate
N = Number of Years

Let’s solve an example;
Find the annual worth when the present worth is 30, the interest rate is 0.2 and the number of years is 4.

This implies that;

P = Present Worth or Amount = 30
i = Interest Rate = 0.2
N = Number of Years = 4

A = P[i((1 + i)^N)] / [((1 + i)^N) – 1]
A = 30[0.2((1 + 0.2)⁴)] / [((1 + 0.2)⁴) – 1]
So, A = 30[0.2((1.2)⁴)] / [((1.2)⁴) – 1]
A = 30[0.2 x 2.0736] / [2.0736 – 1]
A = 30[0.41472] / [1.07359]
Then, A = 30 x 0.386
A = 11.58

Therefore, the capital recovery is ₦11.58.

Read more: How to Calculate and Solve for Sinking Fund | Equal Payment Series | Economic Equivalence

How to Calculate capital recovery | Equal Payment Series Using Nickzom Calculator

Nickzom Calculator – The Calculator Encyclopedia is capable of calculating the capital recovery.

To get the answer and workings of the capital recovery using the Nickzom Calculator – The Calculator Encyclopedia. First, you need to obtain the app.

You can get this app via any of these means:

Web – https://www.nickzom.org/calculator-plus

To get access to the professional version via web, you need to register and subscribe for NGN 1,500 per annum to have utter access to all functionalities.
You can also try the demo version via https://www.nickzom.org/calculator

Android (Paid) – https://play.google.com/store/apps/details?id=org.nickzom.nickzomcalculator
Android (Free) – https://play.google.com/store/apps/details?id=com.nickzom.nickzomcalculator
Apple (Paid) – https://itunes.apple.com/us/app/nickzom-calculator/id1331162702?mt=8
Once, you have obtained the calculator encyclopedia app, proceed to the Calculator Map, then click on Economics under Engineering.

Now, Click on Economic Equivalence under Economics

Now, Click on Capital Recovery under Economic Equivalence

The screenshot below displays the page or activity to enter your values, to get the answer for the capital recovery according to the respective parameters which are the Present Amount or Worth (P), Interest Rate (i) and Number of Years (N).

Now, enter the values appropriately and accordingly for the parameters as required by the Present Amount or Worth (P) is 30, Interest Rate (i) is 0.2 and Number of Years (N) is 4.

Finally, Click on Calculate

As you can see from the screenshot above, Nickzom Calculator– The Calculator Encyclopedia solves for the capital recovery and presents the formula, workings and steps too.