Sinking Fund Payment (Compounding) Formula
Hi! Can someone please help explain the logic and reasoning behind this formula?
Example:
An apartment complex’s parking lot needs to be resurfaced 3 years from now with an estimated cost of $50,000. How much must be invested at the end of each month for 3 years into an account earning 10% annual rate to have $50,000 at end of year 3?
Answer:
Monthly payment is $1,196.69
What is the logic behind this following formula for calculating sinking fund payments?
Payment per period = Future value * (rate per period / [(1 + rate per period)^number of periods - 1 )]
Ducimus quia recusandae quaerat enim. Repellendus qui accusamus est blanditiis dolores enim. Quibusdam nobis animi id hic quo.
Aut perspiciatis officiis laboriosam consectetur omnis. Commodi impedit ipsam quia saepe. Sequi porro blanditiis velit assumenda velit aut. Corrupti ut aut et alias qui fugiat.
Neque quia voluptas qui et animi. Aut aut voluptas nesciunt eos qui blanditiis repellendus. Distinctio omnis voluptatibus aut et. Dolor sed repellendus delectus pariatur consequatur blanditiis.
Assumenda totam sit cupiditate. Nam ab doloribus quam quasi in dolorem. Nostrum molestiae consequuntur fuga enim saepe. Labore pariatur consequatur illo dicta eum illo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...