3.3. Uniform Series Payments Factors

Try these first

1. 1.

   What does the Uniform Series Capital Recovery Factor help calculate?

   Hint

   Think about payments related to borrowing money.

2. 2.

   What is the purpose of the Sinking Fund Factor?

   Hint

   It helps in saving for something in the future.

3. 3.

   What does USCRF stand for?

   • Uniform Series Cash Recovery Factor
   • Uniform Series Capital Recovery Factor
   • Uniform Series Cost Recovery Factor

   Hint

   Focus on capital recovery in the name.

4. 4.

   True or False: The sinking fund factor can be used to calculate how much to save annually to reach a future goal.

   • True
   • False

   Hint

   Think about how savings work.

5. 5.

   If you have a cash flow of $2000 each year for the next 6 years and an interest rate of 5%, how much needs to be invested today using the USPW?

   Hint

   Calculate the present value using each cash flow as a factor.

6. 6.

   How would you use the sinking fund method to prepare for purchasing a $30,000 machine in 10 years at an interest rate of 4%?

   Hint

   Think about dividing the total cost by the effective growth rate over the period.