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    annuity and a sinking fund

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    What is the difference between an annuity and a sinking fund? If you were to set up an annuity today to purchase something in 7 years what would it be for? If you were getting 6% compounded annually what would your payments need to be to reach your goal? What type of payments would you want to make (monthly, quarterly, yearly, etc) and why?

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    Solution Summary

    A contrast is made between an annuity and a sinking fund.

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