Business Math
$300,000 accumulated in 30 years @12% compounded annually. What would the sinking payment be?
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The sinking payment is the amount paid each year to reduce the principal of a loan or to increase the cash balance of an account. In this case, the sinking payment would be the amount paid each year to reduce the principal of the loan by the amount of the accumulated interest. Therefore, the sinking payment in this case would be $36,000 ($300,000 x .12). This amount will be paid annually for 30 years. This will reduce the principal of the loan by $36,000 each year and result in an accumulated total of $300,000 in 30 years.
