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4 cards from this section. Quick, good the night before a test.
What is the formula for calculating the annual deposit in a sinking fund?
What does each letter in the formula represent?
Define what a sinking fund is.
Think about why companies might create such funds.
What does the 'A' represent in the sinking fund formula?
Think about what money is being set aside each year.
True or False: A sinking fund is used to save for unexpected expenses.
Consider the definition of a sinking fund.
A company plans to replace its office equipment in 5 years at an estimated cost of 1,200,000 rupees. If they plan to earn a 7% interest rate compounded annually, calculate the annual deposit required.
Make sure to calculate (1+i)^n carefully.
If a factory needs to save for 2,000,000 rupees for a machinery purchase in 10 years with an interest of 5%, how much should they set aside each year? Show the calculations.
Ensure you properly perform the compound interest calculations.
6 more questions in this section. Enroll free to practise them all.
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