Mathematics for FinancePYQ Jun 23Question 1463 of 512
All Questions

Sinking fund factor is the reciprocal of:

Options

APresent value interest factor of a single cash flow
BPresent value interest factor of an annuity
CFuture value interest factor of an annuity
DFuture value interest factor of a single cash flow
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option c — Future value interest factor of an annuity

All Options:

  • APresent value interest factor of a single cash flow
  • BPresent value interest factor of an annuity
  • CFuture value interest factor of an annuity
  • DFuture value interest factor of a single cash flow

Detailed Solution & Explanation

The Sinking Fund Factor (SFF\displaystyle SFF) is used to calculate the periodic payment needed to accumulate a target future value. The formula for the periodic payment A\displaystyle A to accumulate a future value FV\displaystyle FV is: A=FV×i(1+i)n−1A = FV \times \frac{i}{(1+i)^n - 1} The term i(1+i)n−1\displaystyle \frac{i}{(1+i)^n - 1} is the Sinking Fund Factor. The Future Value Interest Factor of an Annuity (FVIFA\displaystyle FVIFA) is: FVIFA=(1+i)n−1iFVIFA = \frac{(1+i)^n - 1}{i} Comparing the two formulas, the Sinking Fund Factor is the reciprocal of the **Future Value Interest Factor of an Annuity** (FVIFA\displaystyle FVIFA). Hence, **Option C** is the correct answer.

More Questions from Mathematics for Finance

Ready to Master Mathematics for Finance?

Practice all 512 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free