ABSTRACT
The principle is that a fixed sum of money is invested every year over a specified time period in a form of investment that provides a compound interest payment, so that at the end of the time a
In this chapter … • What a sinking fund is, why it may be used and how to calculate it. • The effects of tax on sinking funds and how to adjust for them. • Why sinking funds are used in conventional appraisals of leasehold interests. • Types of mortgage, how repayments work on them and how to calculate those repayments.
pre-determined sum of money will have accumulated. Due to its nature, the interest rate achieved on a sinking fund is sometimes referred to as the ‘accumulative’ rate of interest.
