How is sinking fund deposit calculated?

Sinking Fund, A= [(1+(r/m))n*m-1] / (r/m) * P

  1. P = Periodic contribution to the sinking fund,
  2. r = Annualized rate of interest,
  3. n = No. of years.
  4. m = No. of payments per year.

What is the sinking fund factor?

The sinking fund factor is a ratio used to calculate the future value of a series of equal annual cash flows.

How do you calculate sinking fund schedule?

How It Works

  1. Step 1: Draw a timeline.
  2. Step 3: Fill in the present value of the annuity (PV).
  3. Step 4: Fill in the rounded annuity payment (PMT) all the way down the column, including the final payment row.
  4. Step 5: Calculate the interest portion of the sinking fund’s current balance (INT) using Formula 13.1.

How is sinking fund and repair fund calculated?

In accordance with Bye Law No. 13 (C), the General Body can decide the Sinking Fund contribution, subject to the minimum of 0.25% per annum of the construction cost of each flat incurred during the construction of the building of the Society and certified by the Architect, excluding the proportionate cost of the land.

What is sinking fund with example?

Another example may be a company issuing $1 million of bonds that are to mature in 10 years. Given this, it creates a sinking fund and deposits $100,000 yearly to make sure that the bonds are all bought back by their maturity date.

Why is it called sinking fund?

Why is it called a sinking fund? Don’t be fooled by the seemingly negative word “sinking.” In more traditional circles, “sinking fund” refers to money set aside to pay off long-term debt such as a bond. The term “sinking” likely refers to the decreasing level of debt remaining as it gets paid off.

What is the sinking fund factor How and why is it used?

The SFF is the equal periodic payment that must be made at the end of each of n periods at periodic interest rate i, such that the payments compound to $1 at the end of the last period. The SFF is typically used to determine how much must be set aside each period in order to meet a future monetary obligation.

What is the percentage of sinking fund?

0.25 percent per annum
Sinking Fund – Definition In the context of Co-operative Housing Societies (CHS), A Sinking Fund consists of contribution from all Members, at the rate fixed at the General Body Meeting from time to time, subject to the minimum of of 0.25 percent per annum of the construction cost of each flat.

How is 21 interest maintenance charge calculated?

For example if Rs 500 is outstanding as maintenance dues the total payable amount after 5 years is Rs 500 + Rs 500 *21%* 5 years = Rs 500 (principal) + Rs 525 (simple interest for 5 yrs at 21%) = total Rs 1025.

What is sinking funds in math?

Sinking funds. A sinking fund is where we pay annuities to reach a certain goal. Since our money will earn interest over time, we don’t need to provide the entire amount ourselves (the difference will be made up via interest).

How many types of sinking funds are there?

When a firm wants to buy back a bond, it uses a purchase back sinking fund. A bond can be purchased from bondholders at two different prices: market price and sinking fund price. A regular payment sinking fund is used to pay the trustee and other creditors on a regular basis.