Sinking Fund
Calculator-Sinking Fund
FORMULA:
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A sinking fund is when an annuity account is created to meet a future obligation
It answer the question of: If u need the sum of $20,000 within a year for a start-up,what should be the value of your deposit in an account that pay 10% interest monthly to enable you meet your start-up financial demand? -
Computed as followed:
Sinking Fund=
Ar [ (1+r/n)t-1] -
Where:
A=future value
r=annual rate
t=number of years
n=number of times compounded per year