A fund in which
periodic deposits of equal monthly payments
are made for the purpose of ultimately
paying a debt, or replacing assets.
Typically, such
deposits will earn a
compounding interest and will increase
in value over time.
The best way for the
debt to be retired or paid off, is to
establish the final day at which such debt
must be paid off, divide it by the remaining
month and adjust for interest.
Sinking fund is very
similar to a
reserve fund, which in stead of paying
of debt, collects payments for future
expenses.
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