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This calculator calculates the total payment on a sinking fund loan or an initial loan amount where a sinking fund method is utilized to pay for the loan. Enter 4 out of the 5 entry boxes, 3 of which must be entered, and the optional box is either the loan amount or payment, based on what you wish to calculate. The sinking fund formula is as follows:

Payment = D + I

where the sinking fund deposit D is denoted below:

D = | Loan * i |

(1 + i)^{n} - 1 |

and I = Loan * Effective Interest Rate on the Loan, n is the number of periods of the loan, and i is the sinking fund interest rate per period.

EXAMPLE: You are given a loan of 1000 with an effective interest rate of 10% which is to be repaid using the Sinking Fund method in 4 years at an effective interest rate of 8% per year. Calculate the total payment

You would enter 8 for interest rate, 1000 for loan amount, and 4 for number of periods and 10 for effective interest rate. Press Calculate Total Payment and your answer is 321.92.

Interest rates must be entered per period, so if you are given a loan of 12% per year with monthly payments, you would enter 1, or 12/12 for interest rate.