Sinking Fund Payment Calculator
A sinking fund lets you reach a known future amount through regular deposits that earn interest along the way. It is the standard tool for retiring bonds, planning equipment replacement, or saving for a predictable big expense. Enter your future value goal, the periodic interest rate, and the number of deposit periods. The calculator returns the required deposit each period, the total of all deposits, and the interest earned, so you can see exactly how much of the goal your contributions versus compounding will fund.
Sinking fund payment formula
i = rate per period / 100
Payment = FV * i / ((1 + i)^n - 1)
If i = 0: Payment = FV / n
Total deposits = Payment * n
Interest earned = FV - total deposits
FV is the future value goal, i is the periodic interest rate, and n is the number of deposit periods. Deposits are assumed at the end of each period (ordinary annuity). The number of periods must be positive.
Sinking fund context
- Corporations establish sinking funds to retire bond principal gradually rather than all at once at maturity.
- The formula is the future-value annuity factor solved for the periodic payment.
- Use the periodic rate (annual rate divided by periods per year) and total periods so the schedule matches.
- Interest earned is the gap between the goal and the sum of your own deposits.
- Deposits made at the start of each period (annuity due) would require a slightly smaller payment.
Sinking fund payment: frequently asked questions
What is a sinking fund?
A sinking fund is money set aside through regular deposits so that a known future obligation can be met. Businesses use them to retire bonds or replace equipment; households use them to save for predictable large expenses. The deposits earn interest until the target date.
What is the sinking fund payment formula?
The periodic payment equals the future value goal times i divided by ((1 + i) raised to the power n, minus 1), where i is the interest rate per period and n is the number of periods. This is the future-value-of-an-ordinary-annuity factor solved for the payment.
How does compounding frequency affect the deposit?
More frequent compounding (and deposits) lets interest accumulate more often, which slightly reduces the required deposit. Enter the periodic rate (annual rate divided by periods per year) and the total number of periods so the math matches your deposit schedule.
What if the interest rate is zero?
With a zero interest rate the fund earns nothing, so the periodic deposit is simply the future value goal divided by the number of periods. This calculator handles the zero-rate case separately to avoid dividing by zero.
How is a sinking fund different from an amortized loan?
A sinking fund accumulates a future sum through deposits that earn interest, while loan amortization pays down a present debt over time. The mathematics are mirror images: one builds up to a future value, the other pays off a present value.
Official sources
- U.S. Securities and Exchange Commission: Investor.gov, Bonds.
- U.S. Department of the Treasury: TreasuryDirect.
Reviewed by the CalculatorHub team, edited by James Graham, 16 June 2026. See our methodology.