For example, with the 4 per cent rate, the annual contribution to a sinking fund for a ten-year amortization period would be 8.33 per cent; for a thirtyyear amortization period 1.78 per cent; and for a fifty-year amortization period 0.66 per cent. The amount of the annual accretion to the sinking fund grows from year to year with the growth of the fund itself. Table 43 may also be used for determining the accrued sinking fund at the end of any number of years, remembering the mathematical relationship that life rate in per cent Accrued amount in percent Thus the accrued fund at the end of period of thirty years, would be equal to of 50 per cent on a straight line basis). age rate in per cent fifteen years, with an amortization 1.78 per cent 4.99 per cent or 35.6 per cent (instead An example of the method of figuring annual and accrued depreciation upon the sinking fund basis is shown below in table 46. The interest rate assumed was 4 per cent. The annual depreciation allowances shown in per cent of gross reproduction cost in column 6 and in dollars in column 7 correspond to the estimated lives of the structures in years, shown in column 5 and are taken directly from annuity tables similar to tables 43 and 44 submitted herein. The total accrued depreciation allowances corresponding to the individual ages of the structures shown in column 8 are given in per cent in column 9 and in dollars in column 10. The accrued percentage may be taken from annuity tables showing the amount of TABLE 44 Annual depreciation in pèr cent at 5-year intervals for structures of stated useful lives based upon sinking fund method with 4 per cent interest rate. (The stated amounts include the annuity plus the annual interest upon the accrued fund) a sinking fund with accumulations at the end of each year, remembering that the accrued depreciation percentage is equal to the quotient of the life rate divided by the age rate; or it may be taken from the diagrams shown in figure 19. The resulting net or reproduction cost less accrued depreciation of the several structures, is shown in column 11. TABLE 45 Approximate life of water works structures and corresponding annuity (excluding annual interest accretion to depreciation fund) At the foot of column 7 is shown for the structures given the fair annual depreciation allowance $7420 equivalent to approximately 1.07 per cent, to which must be added the 4 per cent annual allowance upon the amount in the accrued depreciation fund. The latter is 4 per cent of $145,770, or $5830. The combined amount of annuity and interest allowance upon the fund to be accounted. during the year, then amounts to $7420 plus $5830 or $13,250. As a means of checking these figures by a different method, computation is made in columns 12, 13 and 14 of the annual depreciation allowance which must be set aside on the year for which computation is made,' in contribution to a depreciation allowance fund to amortize the remaining net or depreciated reproduction cost of the structure, given in column 11, in the estimated remaining life of the structure, given in column 12, found by subtracting the age or elapsed life shown in column 8 from the estimated total life shown in column 5. The percentage of the annual depreciation 1 This percentage will increase from year to year. It is to be borne in mind that no additional payment to cover interest is to be added annually to the fund under this method of computation. |