Asked by Talin Mirzaei on Jul 15, 2024
Verified
A sinking fund is used to pay off portions of debt each year.
Sinking Fund
A fund established by a borrower, setting aside revenue over time to repay a debt or replace a depreciating asset in the future.
- Comprehend the function and benefits of sinking funds for debt management.
Verified Answer
NJ
Navjit JosanJul 20, 2024
Final Answer :
True
Explanation :
A sinking fund is a fund established by an organization or government to set aside revenue over a period of time to fund a future capital expense or repayment of a long-term debt. Its purpose is to spread out the cost of a large expense over multiple years, making it easier to manage financially.
Learning Objectives
- Comprehend the function and benefits of sinking funds for debt management.