Capital Recovery
Capital recovery is the annual equivalent cost of owning an asset after considering salvage value.
$$CR=\frac{(FC-SV)(1+i)^n i}{(1+i)^n-1}+SV(i)$$
Capital recovery is the annual equivalent cost of owning an asset after considering salvage value.
A machine costs Php50,000, has 10-year life, and salvage equal to 10% of original value. Find capital recovery at 8%.
Salvage value is P5,000.
Final answer: P7,105 per year.
A machine costs $100,000, has life 15 years, salvage 20% of original cost, and interest 10%. Find capital recovery.
Final answer: $12,517.90 per year.