Economics Time Value Of Money Questions Long
The formula for calculating the future value of a sinking fund is as follows:
Future Value = P * (1 + r/n)^(n*t)
Where:
- Future Value represents the total amount of money accumulated in the sinking fund after a certain period of time.
- P refers to the periodic payment or contribution made to the sinking fund.
- r represents the annual interest rate (expressed as a decimal).
- n represents the number of compounding periods per year.
- t represents the number of years the sinking fund is held for.
This formula assumes that the sinking fund makes regular periodic payments or contributions, and that the interest is compounded at regular intervals. By using this formula, one can determine the future value of the sinking fund, which represents the total amount of money that will be available at the end of the specified time period.