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Sinking Fund formula helps calculate the amount to be kept aside from the revenue over a period to bear other planned future expenses. It, in short, becomes a saving for the business, which stores this amount intentionally to bear the expenses that have been already planned.
This sinking fund calculator provides a computation of the amount of money you will need to contribute to a sinking fund for each given period to reach a savings target. You can calculate a sinking fund payment plan in five simple steps: Input the target sum of money you need to accumulate.
The sinking fund method is a technique for depreciating an asset while generating enough money to replace it at the end of its useful life.
A sinking fund is an account a corporation uses to set aside money earmarked to pay off the debt from a bond or other debt issue. The fund gives bond investors an added element of security.
The sinking fund calculator is a tool that helps you find the value you should put aside to achieve your goal at the end of the provided period. If you want to learn more about how to avoid paying lump sums on your debts or bond maturities, go to the next section to find the sinking fund definition.
A sinking fund is a special account into which an investor, either an individual or a business, makes annuity payments so that sufficient funds are on hand by a specified date to meet a future savings goal or debt obligation.
A sinking fund is a reserve created by a company to set aside money over time for the purpose of repaying debt or replacing a significant asset at a future date. The primary purpose of a sinking fund is to reduce credit risk for investors and provide a structured method for debt repayment.
In this post, we have discussed the Sinking Fund Method of Depreciation. Its Formula, Working, Advantages, Disadvantages with Example.
A sinking fund is a fund required to be setup by the bond issuer to which it must contribute money each period to repurchase a certain portion of the bond issue. It can also be referred to a fund created by a company to accumulate money for replacement of a large asset or any other major expenditure.
Sinking Fund Formula: To further refine your calculations, you can use the sinking fund formula: P = (F - A)/n. P: Periodic contribution amount. F: Target amount you need to accumulate. A: Any initial amount already saved (optional) n: Number of periods for saving. Let's revisit Sarah's example using the formula: