Practice Uniform Series Sinking Fund Factor (4.4) - Uniform Series Capital Recovery Factor

Practice: Uniform Series Sinking Fund Factor

Lesson 4.4Uniform Series Capital Recovery Factor

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9 questions

Flashcard drill
2 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
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Quiz
3 questions · about 2 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
What is the purpose of the sinking fund factor?
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Think about long-term investments.
Question 2.
Explain 'future value'.
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It's what you wish to have in the future.
3Question 3.
What is the sinking fund factor primarily used for?
- To calculate future cash flows
- To determine annual payments for a future sum
- To find present value
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Focus on savings and future goals.
4Question 4.
True or False: Sinking fund factor can help in determining loan repayment schedules.
- True
- False
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Think about loan structures.
Question 5.
A company plans to purchase a piece of equipment costing $30,000, expecting to sell it for $7,000 after 6 years. If the company earns an interest rate of 7%, determine how much it should save each year into a sinking fund to account for the future expected salvage amount.
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Subtract the salvage value from the original cost before applying calculations.
Question 6.
You want to ensure you can buy a new vehicle worth $25,000 in 5 years. Assuming an interest rate of 5%, how much should you contribute annually to reach this aspiration using a sinking fund?
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Always remember to apply the interest rate in the formula.

5 more questions in this section. Enroll free to practise them all.