PRC-2 · Chapter 4 · Question 39 of 60
A 'Sinking Fund' is specifically designed to:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Accumulate a specific sum of money through periodic deposits to replace an asset or repay a debt in the future.
Explanation
A sinking fund is an application of annuities where regular installments are saved and invested to reach a targeted future financial goal.
More Linear Programming MCQs
- Q41The 'Rule of 72' is a quick mental shortcut used to estimate:
- Q42In an 'Annuity Due', when are the periodic payments made?
- Q43What is 'Amortization' in the context of a loan?
- Q44If the nominal rate is 12% and compounding is monthly, what is the 'periodic rate' used in calculations?
- Q45Which of the following is the standard formula for Compound Interest (A)?