Recycling Rate (REA)

Definition

The fraction of deployed capital that returns to the system for redeployment. A closed pool declines at any R < 1 — R sets how slowly, and the replenishment needed to hold the level is (1 − R) per cycle.

Formula

Example

An education PSC with R = 0.85 means 85% of deployed capital returns through graduate contributions. Over 30 cycles that is a system value multiplier of 11.2× against a single grant's 1.7× — and the pool itself is down to 0.9% of its opening capital.

Source

REA Section 3.1