Sinking fund factor, Financial Accounting

Assume that you are interested in understanding how much must be saved regularly over a period of time in order that at the ending of the period you have a particular amount. To answer such question here we manipulate the equation as

FVAn  = A[((1 + k)n - 1)/k]

That demonstrates the relationship in between FVAn , A, K and

A = [k/((1 + k)n - 1)]FVAn    ............................Eq(11)

Equation 11 assists in answering this question. The periodic deposit is easily A and is acquired by dividing FVAn by FVIFAk,n. In Eq 11[k/((1 + k)n - 1)]  is the inverse of FVIFAk,n and is termed as the sinking fund factor.

Posted Date: 4/9/2013 2:39:19 AM | Location : United States

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