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Chapter 7

Terminal values and sinking funds

7.1 Terminal values

The terminal value of a project is found by compounding all of the
individual cash flows to the end of the project and then adding them up.

7.1 Sinking funds

A sinking fund is a special type of investment in which a constant amount
is invested each year, usually with a view to reaching a specified value at
a given point in the future (its terminal value).

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