Learn about sinking funds. Understand what a sinking fund is, examine the sinking fund formula and how it is calculated. See a real-life example of...
Sinking Fund Formula You can use a sinking fund formula to calculate the amount of regular or periodic contributions that go into a particular sinking fund. Through the use of this method, the issuer of the bonds can suitably prepare its assets in redeeming the bonds upon their maturity...
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 o
This amount ispin the sinking fund payment formula. Input Data for Calculating Sinking Fund Payments When a business firm sets up a sinking fund, the firm already knows the purpose of the fund, that is, for paying off a known liability, acquiring a specific capital asset, or making a specif...
Note−Sinking Funds are a great way to calculate the future payment of a fund. It is useful in many ways and is used extensively. Many types of loans usually prefer the sinking fund method, as it is both reliable and rewarding.