HOMER Pro 3.16

Zoom Window Out
Larger Text | Smaller Text
Hide Page Header
Show Expanding Text
Printable Version
Save Permalink URL

Navigation: Glossary

Sinking Fund Factor

HOMER Logo

The sinking fund factor is a ratio used to calculate the future value of a series of equal annual cash flows. The equation for the sinking fund factor is:

equations_sff

where:
	i	= real discount rate
	N	= number of years

For example, for i = 7% and N = 5 years, the sinking fund factor is equal to 0.1739. Therefore, five annual payments of $173.90 earning 7% interest are worth $1000.00 at the end of the fifth year.