After obtaining as above the present value $4,166,662-3 by dividing by

93



o6, and then taking the present value as a representative of the compound
interest of a certain su^n which invested will produce that amount, and
dividing the $4,166,662-3 by the compound interest of $1.00 for eight
years at 6 per cent, i. e., i. 5938481, we have $2,614.22 as the present value
of the perpetuity which has been deferred eight years. This means the
amount claimable by the beneficiary, who has been deprived for a series of
years of his annual income under the above circumstances.
And so to extend the illustration of principle a little further, if it is
asked to find the present value of a perpetuity of $160 a year to commence
in 3 years 4 months at 7 per cent. Solution: 160 divided by .07 gives
$2,285.71; then the

Compound interest at $1 for 4 years at 7 per cent, is 1.310796

Compound interest of $1 for 3 years at 7 per cent, is 1.225000



3) .085796



.028598
Adding this to the compound interest for 3 years 1.225043 we have
1.253641 as a divisor of the $2,285.71 above obtained, yielding a result of
$1,823.28 for the present value required.
