Discussion
The relation between the capital recovery and sinking fund factors is that the capital recovery factor equals the sinking fund factor plus
Answer: A
Correct answer: the interest rate i
The identity is \( (A/P, i, n) = (A/F, i, n) + i \). The reasoning is direct: to recover a present sum you must both pay the interest on it each period, which is \( iP \), and accumulate the principal itself by the end, which is the sinking fund deposit. The two together are the capital recovery amount.
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