-11-
18 180,699 25,000 155,699 13,456 169,155
19 169,155 25,000 144,155 12,532 156,688
20 156,688 25,000 131,688 11,535 143,223
21 143,223 25,000 118,223 10,458 128,680
22 128,680 25,000 103,680 9,294 112,975
23 112,975 25,000 87,975 8,038 96,013
24 96,013 25,000 71,013 6,681 77,694
25 77,694 25,000 52,694 5,216 57,909
26 57,909 25,000 32,909 3,633 36,542
27 36,542 25,000 11,542 1,923 13,466
We note four preliminary points about petitioner's
calculation. First, the annual account balance is reduced by
$25,000 (see col. 4, above) before the stated interest rate, 8
percent, is applied to the balance (see col. 5, above). The
amount of interest, thus computed, is then increased by $1,000.
Presumably, this $1,000 increase is intended to be the interest
on the $25,000 payment. In making the calculation in this way,
we believe that the real rate of interest used in petitioner's
calculation is 7.5013149 percent, not 8 percent.
Second, according to petitioner's calculation the account
balance is not fully amortized by the end of the 27th year. As
shown in petitioner's schedule, reproduced above, there remains a
balance of $13,466 at the end of the 27th year. Therefore,
petitioner's calculation uses slightly more than 27 years to
amortize the account balance.
Third, petitioner states that the life expectancy of 27
years is based upon "an insurance mortality table" that he
"found". Significantly, this life expectancy is substantially
less than the life expectancy that would be determined in
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Last modified: March 27, 2008