Solution:Sinking fund–The fund which is gradually accumulated by way of periodic on annual deposit for the replacement of the building or structure at the end of its useful life is termed as sinking fund. The calculation of the sinking fund depends on the life of the building and the scrap value of the building for the cost of old materials.
The among of annual installment of the sinking fund for formula
where,
S = Total amount of sinking fund to be accumulated
n = Number of years required to accumulated the sinking fund
i = Rate of interest in decimal
I = Annual installment required
Market value–The value of property when it is kept for open auction is known as market value. It depends upon its locality, remaining design life, material quality and structural use.
Scrap value–After completion of design life, the value of property after dismantled represents its scrap value. This value can be +ve, 0 or –ve. For RCC members, scrap value is always –ve.
Salvage value–After completion of designed life the value of property without being dismantled is known as salvage value.