LIFE ANNUITIES.'
119
To find the Value of an Annuity.
Rule. Multiply the number of years’ purchase found by the tables,
by the yearly sum of which the value is required *.
Example. What is the value of an annuity of ¿£'364 to continue
during the life of a person aged 36, assuming 4 per cent as the interest
of money, and the rate of mortality the same as at Northampton ?
Table 7, cf 3 6 = 13.8815
364
555260
832890
416445
5052,8660 =¿£5052 17 4
A man holds an estate producing ¿£56 2 6 per annum during the
life of his wife aged 36; what is the value thereof, interest being 5 per
cent, and the rate of mortality as at Chester ? (Probability Table 3.)
£56 2 6 = ¿£56.125
a 36 = 13.8345
521.65
691725
83007
1383
277
69
776.461 = ¿£776 9 3.
120. To find the Annuity which a Sum of Aloney will purchase.
Rule. Divide the sum by the number of years’ purchase the annuity
is worth, according to the tables.
Example. What annuity receivable during the life of a female aged
36 may be purchased for £776 9 3 at 5 per cent interest, Chester rate
of mortality P (Probability Table 3.)
(Prob. Table 3,) a 3S = 13.8345 £776 9 3 = £776.4625
13.8345)776.4625(56.125=£56 2 6
691725
TsYTsTs
830070
1730Y
3470
2767
” .703'
* When the annuity is payable half-yearly, add - , and when payable »T times
a-year add — to the tabular value of the annuity; in the present example
2 m
(13.8815 + .25)x364 is the present value when payable half-yearly, and (13.8815.
-(-.375)X364 is the present value when payable quarterly. {Fide Baily & Milne.)