Correct Answer - Option 3 : sinking fund
Explanation:
A sinking fund is a fund that is built up for the sole purpose of replacement or reconstruction of a property when it loses its utility either at the end of its useful life or becoming obsolete.
The fund is regularly deposited in a bank or with an insurance agency so that on the expiry of the period of the utility of the building, a sufficient amount is available for its replacement.
The calculation of the Sinking Fund depends upon the life of a building as well as upon the rate of interest and it is generally calculated on 9/10 of the cost of construction as the owner will get 10% as scrape value of the building when the life of the building is over.