Method 1 is, in theory, the most exact method based on a discounted cash flow. This is the simplest and most accurate method, but it is slowest by a factor of 𝑚. However, Method 1 is still blazingly fast in EAC Tools!

Because  is defined by a mortality table based on whole ages, it is necessary to obtain a value for  for integral 𝑥 and 0 ≤ 𝑡 ≤ 1 by assuming a uniform distribution of deaths (UDD) throughout the year of age 𝑥. No other simplifying assumptions are necessary!

Fractional Ages

The present value equation is calculated for fractional ages in a straightforward manner (using UDD).

Payments more frequently that annually

The present value equation is calculated directly using the standard formula in a straightforward manner (using UDD).