Question

Find the amount of each payment to be made into a sinking fund which earns

Answer 1

To calculate the size of the sinking fund, one can use the formula.

A = P.A (n,i)

A = Saving amount. P = Periodic payment.

Example: Calculate the needed amount that must be invested every year so that the total amount sums up to Rs. 3,00,000 by the end of 10 years.

Solution: Here, A = Rs.

A = P.A (n,i)

Answer 2

Explanation:

➡️ What is the definition of sinking fund?

Private and public corporations often use these funds for bonds. For example, a company might deposit money regularly in the fund to buy back bonds each quarter before they mature.

Sinking fund is reported in the section of the balance sheet immediately after the current assets. The bond sinking fund is part of the long-term asset section that usually has the heading Investments. The bond sinking fund is a long-term .The bond sinking fund is a long-term asset even if the fund contains only cash.