For Students

I have a copy of Parrys tables on my desk. They sit there as an obstinate reminder of my advanced middleagedness and I can’t bring myself to get rid of them.

They (because a copy of Parrys is always plural) are not actually ‘mine’. I stole them from my colleague, Mark. At least, I borrowed them from him. Sometime in 1997. He hasn’t asked for them back yet so I’m guessing he probably doesn’t want them. You’ll forgive me, then, if I refer to them as mine.

My copy of Parrys (full name “Parrys Valuation and Investment Tables”) was issued in 1989. It says that they are by a man called Alick Davidson who had the curious title of being the “Sometime Head of Valuation” at the University of Reading. Davidson didn’t write them though. A man called Richard Parry (geddit…) did back in 1913. Hence they produced a 13th edition in 2013 which was the much vaunted 100th anniversary edition. You can still buy it on Amazon for a modest £33.

By 2013 Mr Davidson had been ‘doing’ them for over 40 years. I’m not sure if he’s still around. I hope so. I’d like to think that he’s in comfortable retirement somewhere nice on the Dorset coast after a lifetime’s devotion to yp multipliers.

And a devotion it certainly was. My copy has 330 pages in the main bit followed by 5 coloured sections of 32 pages and a big green bit at the end of 97 pages. Most of the pages have 400 sets of calculations on them and they are all to 4 decimal points. That means about 2,400 numbers per page, potentially 1.4 million numbers in the book. Presumably, Parry calculated them all manually and produced them on a typewriter. The proof reading would have been a gargantuan undertaking. I suspect he got through a lot of secretaries. Davidson writes that his wife helped him. I don’t think mine would have.

By 1989 computers had made the job easier. Davidson writes that my edition was produced on an IBM 360/40 computer which sounds as though it may have been large and noisy. He says that it could calculate to “a degree of accuracy of 0.50 of the last decimal retained where the printed multipliers do not exceed seven figures”. Indeed.

The basic premise behind Parrys (and pretty much everything we do as a business) is that £1 today is worth more than a £1 tomorrow. This leads neatly to the tables on which the whole thing is based: the Amount of £1 tables (p 93). Also known as compound interest; our old friend 1 plus i to the n.

When my tables were produced, a working example of this might have been: “Your best friend Kenneth wants to borrow 10p to buy some football cards. You agree to lend him it for a month at 11% (3% above base). How much will Ken owe you in a month?” Bosh.

An extension of the Amount of £1 table is the Amount of £1 per annum. It’s like the Amount of £1 table but it assumes that you keep investing a new £1 every year: “Your favourite Uncle Jimmy always gives you £2 at Christmas. If you invest his money in War Bonds at 6% for the next 4 years will you have enough to buy a Chopper?”

Years Purchase is a sort of reverse Amount of £1 per annum. This is the one we use all the time: “You want to buy a Soda Stream that you have seen in Exchange ‘n Mart for £4. Ken says he’ll lend it to you if you assign him the right to receive Uncle Jimmy’s Christmas money for the next 3 years. Assuming interest rates between now and then average 8.5%, is Ken getting a good deal?”

All the above tables then have their equivalent ‘dual rate’ cousins. This introduces the idea of a sinking fund: some money set aside to buy a new asset if the one you’re buying is a wasting one: “Father is buying an office block on the Euston Road off the Corporation of London for £150,000. It is a short leasehold with only 55 years unexpired and is producing £28,000 pa. How much does he have to set aside from the rent each year to buy another building at 9% and still have enough left over for a Jensen?”

At around page 150 you start getting into mortgages. Mine goes up to eye watering mortgage rates of 17.75%. The tables show the monthly sum in £s required to redeem £100: “Your eldest brother, Nigel, is marrying his childhood sweetheart, Barbara and they’re buying a new semi in Crawley to move into after the wedding. The man from the Alliance says they can borrow all of the £12,000 they need for their new home. How much will they have to repay annually on a 30 year repayment mortgage at 9%?”

At around page 200 tables of IRR start to appear. These were a new innovation in my edition and they get a special introduction in the Preface. Having undergone my adult education in the age of the computer - just - I have never known how these tables work. Answers on a postcard, please.

Towards the end, the tables take on a somewhat darker tone. Faintly sinister undertones resonate in: ‘Years Purchase for the Continuation of Two Lives’. “Father’s friend, Terry, has bought a tenement in Soho for redevelopment. The building is vacant, save for an elderly couple, Dorothy and Malcolm, living in the basement…” A Dickensian vision of a retirement spent in penury is conjured by: ‘Single Premiums to Secure £1 at Death’.

Parrys currently has 3 customer ratings on Amazon and each gives them the maximum 5 star recommendation. They bear witness to the enduring appeal of this marvel of the not-so-modern world: a testament to the remarkable devotion of Parry and Davidson to the science of the mathematic relationship between time, money and interest rates. The latest rating is from August this year. This person gives a fond account of what a privilege it was to have been taught by Alick Davidson himself in 1995 when he was a valuation tutor at Westminster University. There is poetic, probably unintended, irony in his review:
[5 stars] "still invaluable"

John Miles February 2016