Sinking Fund Problems

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Problem:

 

An apartment owner saves for a $20,000 roof that will need to be replaced in 10 years.  The estimated rate that can be earned over the 10 year period is 7%.

 

Solution:

 

1.Use the annual 7% table
2.The sinking fund factor for 10 years (column 3) is 0.072378
3.$20,000 x 0.072378 = $1,448

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