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4 cards from this section. Quick, good the night before a test.
What is the capital recovery factor used for?
Think about what it means to pay off a loan.
Define the sinking fund factor.
Consider how you save for large purchases.
What does the capital recovery factor allow you to determine?
Consider the repayment process.
True or False: The present worth factor and the sinking fund factor are identical.
Think about their different purposes.
You are planning to purchase a new truck costing $100,000. If you want to save for it over 5 years at an interest rate of 4%, what annual amount should you deposit into a sinking fund?
Use the sinking fund formula for your calculations.
You expect to receive $8,000 at the end of each year for 10 years. If the discount rate is 6%, what is the present worth of these cash flows?
Remember to factor in the discounting based on the annual returns.
5 more questions in this section. Enroll free to practise them all.
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