4.4 - Uniform Series Sinking Fund Factor
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Practice Questions
Test your understanding with targeted questions
What is the purpose of the sinking fund factor?
💡 Hint: Think about long-term investments.
Explain 'future value'.
💡 Hint: It's what you wish to have in the future.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the sinking fund factor primarily used for?
💡 Hint: Focus on savings and future goals.
True or False: Sinking fund factor can help in determining loan repayment schedules.
💡 Hint: Think about loan structures.
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Challenge Problems
Push your limits with advanced challenges
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.
💡 Hint: Subtract the salvage value from the original cost before applying calculations.
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?
💡 Hint: Always remember to apply the interest rate in the formula.
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