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This spreadsheet computes multipliers for the cost of future care in two ways:
1. The actuarially correct method, which is based on the chances that the Claimant will survive 1 more year,
2 more years, …, 100 more years. The chance of surviving to age x is specified in the l(x) column of
the life table. The user must supply this l(x) column, as the life expectancy alone is not sufficient here.
2. The incorrect but widely used "annuity certain" method. This assumes that the Claimant lives exactly to his
life expectancy and then dies. In effect, the assumption is that l(x) remains at 100,000 until the life
expectancy, and then immediately falls to zero. The answers obtained here are the same as those given by
Table 38 of the English Ogden Tables and the Australian Personal Injury Litigation Data Card.
The spreadsheet is set up under the assumption of equal payments in each year; these are the 1.0's
in the "cost of care" column. If the costs are not equal, the concept of a multiplier is not well defined, and
one should instead compute the expected present value (EPV) of the costs.
Finally, you may require a multiplier under the assumption of a different life expectancy. If the new life
expectancy is only slightly different from the old one -- no more that 2-3 years different, say -- simply enter the
new life expectancy; the spreadsheet will re-compute the multiplier fairly accurately. If a more precise
calculation is required, or if the new life expectancy is very different from the old one, you will need to enter
the l(x) column that corresponds to the new life expectancy.
Multlipliers (Outputs)
Use Of Full Life Table 19.46 Requires inputs in cells C31 and C32, plus the l(x) and cost of care columns below
Expectancy Method 22.12 Requires inputs in cells C31 and C32, plus the cost of care column below
Required Inputs
Age At Trial 5.00 Use decimal notation. Example: 5 years 2 months is 5.17
Life Expectancy 32.00 As given by the life table, or specified
Net Discount Rate 2.5% Example: Enter 2.5% as 2.5
Shavelle@LifeExpectancy.org
phone (415) 731-0240
fax (415) 731-0290
Specify the survival column, l(x), and the cost of care at each age
Cost of
Age l(x) Care