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As a factory owner, you have decided to purchase a heavy machinery after 10 years. It's expected price will be Rs. 1,00,00,000. For this you set aside a certain amount at the end of every year. Which of the following financial tool fits best for this purpose ?

Solution

✅ Correct Option: 3

A sinking fund is a savings instrument where periodic equal amounts are set aside to accumulate to a specified target sum at a future date, used for replacing assets, paying off debts, or making large purchases.

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