Annual Installment for Sinking Fund Calculator

✖Sinking Fund is the amount that has to be set aside out of the gross income so that at the end of the lifetime of the building, the fund should accumulate to the initial cost of the building.ⓘ Sinking Fund [S]			+10% -10%
✖The Rate of Interest is the percent of principal amount charged for the due period.ⓘ Rate of Interest [I_r]			+10% -10%
✖The Number of Years Money is Invested is the total number of years for which the money is invested.ⓘ Number of Years Money is Invested [T]			+10% -10%

✖Annual Installment means a series of amounts to be paid annually over a predetermined period of years in substantially equal periodic payments.ⓘ Annual Installment for Sinking Fund [I_a]

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Formula

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Annual Installment for Sinking Fund

Formula

`"I"_{"a"} = "S"*"I"_{"r"}/((1+"I"_{"r"})^"T"-1)`

Example

`"60.15038"="8000"*"10"/((1+"10")^"3"-1)`

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Annual Installment for Sinking Fund Solution

STEP 0: Pre-Calculation Summary

Formula Used

Annual Installment = Sinking Fund*Rate of Interest/((1+Rate of Interest)^Number of Years Money is Invested-1)
I_a = S*I_r/((1+I_r)^T-1)
This formula uses 4 Variables

Variables Used

Annual Installment - Annual Installment means a series of amounts to be paid annually over a predetermined period of years in substantially equal periodic payments.
Sinking Fund - Sinking Fund is the amount that has to be set aside out of the gross income so that at the end of the lifetime of the building, the fund should accumulate to the initial cost of the building.
Rate of Interest - The Rate of Interest is the percent of principal amount charged for the due period.
Number of Years Money is Invested - The Number of Years Money is Invested is the total number of years for which the money is invested.

STEP 1: Convert Input(s) to Base Unit

Sinking Fund: 8000 --> No Conversion Required
Rate of Interest: 10 --> No Conversion Required
Number of Years Money is Invested: 3 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

I_a = S*I_r/((1+I_r)^T-1) --> 8000*10/((1+10)^3-1)

Evaluating ... ...

I_a = 60.1503759398496

STEP 3: Convert Result to Output's Unit

60.1503759398496 --> No Conversion Required

FINAL ANSWER

60.1503759398496 ≈ 60.15038 <-- Annual Installment

(Calculation completed in 00.004 seconds)

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Created by Chandana P Dev

NSS College of Engineering (NSSCE), Palakkad

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Coorg Institute of Technology (CIT), Coorg

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< 17 Valuation Engineering Calculators

Annual Installment for Sinking Fund

Go Annual Installment = Sinking Fund*Rate of Interest/((1+Rate of Interest)^Number of Years Money is Invested-1)

Coefficient of Annual Sinking Fund

Go Coefficient of Sinking Fund = Rate of Interest/((1+Rate of Interest)^Number of Years Money is Invested-1)

Annual Sinking Fund using Sinking Fund Method

Go Annual Sinking Fund = Rate of Interest/((1+Rate of Interest)^Life of Asset in Years-1)

Percentage Rate of Annual Depreciation

Go Percentage Rate of Annual Depreciation = 1-(Scrap Value/Original Cost)

Years Purchase when Sinking Fund is Recovered

Go Years Purchase = 1/(Rate of Interest on Capital+Rate of Sinking Fund)

Rate of Sinking Fund given YP

Go Rate of Sinking Fund = (1/Years Purchase)-Rate of Interest on Capital

Coefficient of Annual Sinking Fund given Sinking Fund

Go Coefficient of Sinking Fund = Annual Installment/Sinking Fund

Annual Installment given Sinking Fund

Go Annual Installment = Coefficient of Sinking Fund*Sinking Fund

Sinking Fund for Buildings

Go Sinking Fund = Annual Installment/Coefficient of Sinking Fund

Capitalized Value using Profit Based Valuation

Go Capitalized Value = Net Rental Income*Years Purchase

Capitalized Value

Go Capitalized Value = Net Rental Income*Years Purchase

Gross Rent given Net Rent in Rental Method

Go Gross Rent = Net Rental Income+Outgoings of Repairs

Net Rent using Rental Method of Valuation

Go Net Rental Income = Gross Rent-Outgoings of Repairs

Outgoings using Rental Method

Go Outgoings of Repairs = Gross Rent-Net Rental Income

Net Income using Profit Based Valuation

Go Net Income = Gross Income-Outgoings of Repairs

Rate of Interest given Years Purchase

Go Rate of Interest = 100/Years Purchase

Years Purchase

Go Years Purchase = 100/Rate of Interest

Annual Installment for Sinking Fund Formula

Annual Installment = Sinking Fund*Rate of Interest/((1+Rate of Interest)^Number of Years Money is Invested-1)
I_a = S*I_r/((1+I_r)^T-1)

What is the Purpose of a Sinking Fund?

A sinking fund is a strategic way to save money by setting aside a little bit each month. Sinking funds work like this: Every month, you'll set money aside in one or multiple categories to be used at a later date. With a sinking fund, you save up a small amount each month for a certain block of time before you spend.

What are the Advantages of Sinking Funds?

1. Brings in investors: Investors are very well aware that companies or organizations with a large amount of debt are potentially risky. However, once they know that there is an established sinking fund, they will see a certain level of protection for them so that in the case of a default or bankruptcy, they will still be able to get their investment back.
2. The possibility of lower interest rates: A company with poor credit ratings will find it difficult to attract investors unless they offer higher interest rates. A sinking fund offers alternative protection for investors so that companies can offer lower interest rates.
3. Stable finances: A company’s economic situation is not always definite, and certain financial issues can shake its stable ground. However, with a sinking fund, the ability of a company to repay its debts and buy back bonds will not be compromised.

How to Calculate Annual Installment for Sinking Fund?

Annual Installment for Sinking Fund calculator uses Annual Installment = Sinking Fund*Rate of Interest/((1+Rate of Interest)^Number of Years Money is Invested-1) to calculate the Annual Installment, The Annual Installment for Sinking Fund formula is defined as a series of amounts to be paid annually over a predetermined period of years in substantially equal periodic payments, except to the extent that any increase in the amount reflects reasonable earnings through the date the amount is paid. Annual Installment is denoted by I_a symbol.

How to calculate Annual Installment for Sinking Fund using this online calculator? To use this online calculator for Annual Installment for Sinking Fund, enter Sinking Fund (S), Rate of Interest (I_r) & Number of Years Money is Invested (T) and hit the calculate button. Here is how the Annual Installment for Sinking Fund calculation can be explained with given input values -> 60.15038 = 8000*10/((1+10)^3-1).

FAQ

What is Annual Installment for Sinking Fund?

The Annual Installment for Sinking Fund formula is defined as a series of amounts to be paid annually over a predetermined period of years in substantially equal periodic payments, except to the extent that any increase in the amount reflects reasonable earnings through the date the amount is paid and is represented as I_a = S*I_r/((1+I_r)^T-1) or Annual Installment = Sinking Fund*Rate of Interest/((1+Rate of Interest)^Number of Years Money is Invested-1). Sinking Fund is the amount that has to be set aside out of the gross income so that at the end of the lifetime of the building, the fund should accumulate to the initial cost of the building, The Rate of Interest is the percent of principal amount charged for the due period & The Number of Years Money is Invested is the total number of years for which the money is invested.

How to calculate Annual Installment for Sinking Fund?

The Annual Installment for Sinking Fund formula is defined as a series of amounts to be paid annually over a predetermined period of years in substantially equal periodic payments, except to the extent that any increase in the amount reflects reasonable earnings through the date the amount is paid is calculated using Annual Installment = Sinking Fund*Rate of Interest/((1+Rate of Interest)^Number of Years Money is Invested-1). To calculate Annual Installment for Sinking Fund, you need Sinking Fund (S), Rate of Interest (I_r) & Number of Years Money is Invested (T). With our tool, you need to enter the respective value for Sinking Fund, Rate of Interest & Number of Years Money is Invested and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

How many ways are there to calculate Annual Installment?

In this formula, Annual Installment uses Sinking Fund, Rate of Interest & Number of Years Money is Invested. We can use 1 other way(s) to calculate the same, which is/are as follows -

Annual Installment = Coefficient of Sinking Fund*Sinking Fund

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