Sinking Fund |
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Sinking Fund |
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A Sinking Fund is an account in which equal periodic deposits are made to pay a debt or replace an asset. The fund with compound interest will accumulate to a predetermined amount at the end of a stated period of time.
A Sinking Fund is the amount that must be deposited periodically in order to grow to $1 in a given period of time at a given rate. (e. g. – If you want to buy a new car for cash in 5 years, how much do you have to invest each month at 6% to save the necessary $30,000?)
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