Work out sinking fund factor instantly with clear inputs, formula shown and shareable results.
A sinking fund sets aside a level annual amount so that a known sum is available on a future date — typically to redeem a bond or replace an asset. The sinking fund factor is the deposit needed per unit of target.
Sinking fund factor
A/F = r / ((1+r)^n - 1)
They differ by exactly r: A/P = A/F + r, because a loan payment also has to service interest on the outstanding balance.
Over long horizons yes — at 6% over 20 years roughly half the target comes from interest rather than deposits.