Sinking Fund Calculator

Sinking fund is defined as the repayment fund obtained by setting aside revenue over a period of time to fund a future capital expense or repayment of a long-term debt. It can also be used to set aside money for purposes of replacing capital equipment as it becomes obsolete, or major maintenance or renewal of elements of a fixed asset. Make use of this online sinking fund calculator to calculate the required payment based on the total accumulated, interest rate and payback period.

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Sinking fund is defined as the repayment fund obtained by setting aside revenue over a period of time to fund a future capital expense or repayment of a long-term debt. It can also be used to set aside money for purposes of replacing capital equipment as it becomes obsolete, or major maintenance or renewal of elements of a fixed asset. Make use of this online sinking fund calculator to calculate the required payment based on the total accumulated, interest rate and payback period.

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Formula:

f = a × ( ( i / 100) / ( ( ( 1 + ( i / 100 ) )n) - 1) ) Where, f = Required Payment a = Total Accumulated i = Interest Rate n = Payment Period

Example:

Calculate sinking fund required for the total accumulation fund of Rs.50,000, interest rate of 2% and the payback period of 12months.

Solution:

Sinking fund (f) = 50000 × ( ( 2 / 100 ) / ( ( (1 + (2 / 100 ) )12) -1) )
= Rs.3727.97


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