Investing
Annuity factor shortcut
For level flows, the ratio of cost to annual cash pins down the rate.
The Formula
factor = C0 / CF
For level flows, the ratio of cost to annual cash pins down the rate.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| AF | Annuity factor | count | Cost divided by annual cash flow. |
What Each Symbol Means
AFcount
Annuity factor
Cost divided by annual cash flow.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate irr page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate IRR, filed under Finance. Every number the guide produces comes from substituting into this one line.