Find the amount of periodic payment necessary for the deposit to a sinking fund. (Round your answer to the nearest cent.) Amount Needed Frequency Rate Time A $120,000 quarterly 9% 25 yr Need Help? Read It Talk to a Tutor
Sinking fund method is the method under which, the company or an individual is adopting a procedures to set aside certain amount for the payment of debt or bond in future.
Just an example, a company has taken a loan for 1200,000 which it needs to pay after 5 years. So, company must start planning that what sort of amount it must take aside regularly over a period of time. So, that the amount will accumulate to 1200,000 in future. This method is usually considers when the company needs to pay full amount at the maturity. This amount must be in accordance to the market interest rates or the time remaining for the payment. This will provide amount at a equal interval whether it is annually, semi-annually, quarterly or monthly for the payment of total amount.
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