ttcyftxycf (79)-2

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Nov 24, 2024

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(B) Discount for the contingency of the individual's death, but not for the contingencies of his or her disability or unemployment. (C) Reduce the residual income of the individual to its future value. (D) Calculate the size of a fund whose investment earnings will be sufficient to replace the dependents' share of the individual's income. - ✔✔ (A) Deduct the cost of the individual's self-maintenance, life insurance premiums, and personal income taxes. All the following are steps in the five-step process of estimating a person's economic value for purposes of life insurance, EXCEPT: (A) Estimate the person's average annual earnings from personal efforts during the remainder of the person's working years. (B) Deduct the cost of the person's self-maintenance, life insurance premiums, and income taxes. (C) Select a reasonable rate of interest to use in discounting future earnings. (D) Determine the remaining number of years in the person's life expectancy. (E) Multiply the person's net earnings by the present value of $1.00 per year, based on the selected interest rate and the remaining number of years until the person's planned retirement date. - ✔✔ (D) Determine the remaining number of years in the person's life expectancy. Assume that a 40-year old man who plans to retire at age 60 will have gross average annual earnings of about $90,000 during the next 20 years. Assume also that about two-thirds of the income will go for the support of the man's dependents. Assume further that the present value of $1.00 per year for 20 years at a 6% rate of interest is $11.47. Based on the information, which of the following is the approximate economic value of the man's life? (A) $344,000 (B) $688,000 (C) $1,032,000 (D) $1,200,000 - ✔✔ (B) $688,000 Which of the following statements concerning the economic value of the typical human life is (are) correct?

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