sinking fund


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sinking fund,

sum set apart periodically from the income of a government or a business and allowed to accumulate in order ultimately to pay off a debt. A preferred investment for a sinking fund is the purchase of the government's or firm's bonds that are to be paid off. Usually the fund is administered by a trustee. See amortizationamortization
, reduction, liquidation, or satisfaction of a debt. The term amortization may also refer to the sum used for that purpose. The term is commonly used in ascertaining the investment value of securities.
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sinking fund

[′siŋk·iŋ ‚fənd]
(industrial engineering)
A fund established by periodically depositing funds at compound interest in order to accumulate a given sum at a given future time for some specific purpose.
References in periodicals archive ?
Forecast-price valuations require a valuer to model capital recovery in such a way as to ensure that by the end of the forecast period the sinking fund will be adequate to provide for the purchase of a replacement property (similar in terms of its performance and income-producing potential to the subject) at expected new, and usually higher, prices.
But the energy official said that they have yet to peg a suitable figure for the sinking fund, which should be sufficient enough to pay for the necessary costs to remove whatever needs to be removed after a company ceases operations in a particular oil or gas field.
Residents claim the sinking fund is short of pounds 232,000 because of mistakes in Anchor Trust's management.
A company that needs to borrow should consider issuing sinking fund bonds.
Exhibit 2 compares the contingent sinking fund structures for the five-year ISFDs and the ten-year ISFDs.
Each scenario incorporated a sinking fund for asset replacement.
The provisions of a typical sinking fund require the issuer to retire fixed principal amounts before maturity.