4. You and your spouse are in good health and have reasonably secure careers. You make about $75,000 annually and have opted for life insurance coverage of three times your salary through your employer. With your spouse's income, you are able to absorb ongoing living costs of $55,000 a year. You own a home with a $290,000 mortgage. Other debts include a $15,000 car loan, $7,000 student loan, and $4,000 charged to credit cards. In the event of your death, you wish to leave your family debt-free. One of your most important financial goals involves building an education fund of $100,000 to cover the costs of a four-year university program for each of your two children ages two and four. To date, you have accumulated $25,000 toward this goal in an RESP. Should you die, your beneficiaries would receive a $2,500 death benefit lump-sum payment from the Canada Pension Plan. You also have $35,000 in your company pension plan. Average funeral expenses are $13,800. Your other financial assets are as follows: Bank accounts $ 3,100 4,000 2,000 Term deposits (3 months) TFSA High Interest Savings Stock investment account RRSPS 3,500 10,500 Use the family-need method to determine your life insurance needs. Dependents need 4 years of income as living expense. Assume that there is a desire to have a 3-month reserve based on their annual income.
4. You and your spouse are in good health and have reasonably secure careers. You make about $75,000 annually and have opted for life insurance coverage of three times your salary through your employer. With your spouse's income, you are able to absorb ongoing living costs of $55,000 a year. You own a home with a $290,000 mortgage. Other debts include a $15,000 car loan, $7,000 student loan, and $4,000 charged to credit cards. In the event of your death, you wish to leave your family debt-free. One of your most important financial goals involves building an education fund of $100,000 to cover the costs of a four-year university program for each of your two children ages two and four. To date, you have accumulated $25,000 toward this goal in an RESP. Should you die, your beneficiaries would receive a $2,500 death benefit lump-sum payment from the Canada Pension Plan. You also have $35,000 in your company pension plan. Average funeral expenses are $13,800. Your other financial assets are as follows: Bank accounts $ 3,100 4,000 2,000 Term deposits (3 months) TFSA High Interest Savings Stock investment account RRSPS 3,500 10,500 Use the family-need method to determine your life insurance needs. Dependents need 4 years of income as living expense. Assume that there is a desire to have a 3-month reserve based on their annual income.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:4. You and your spouse are in good health and have reasonably secure careers. You make about
$75,000 annually and have opted for life insurance coverage of three times your salary through
your employer. With your spouse's income, you are able to absorb ongoing living costs of
$55,000 a year. You own a home with a $290,000 mortgage. Other debts include a $15,000 car
loan, $7,000 student loan, and $4,000 charged to credit cards. In the event of your death, you
wish to leave your family debt-free. One of your most important financial goals involves building
an education fund of $100,000 to cover the costs of a four-year university program for each of
your two children ages two and four. To date, you have accumulated $25,000 toward this goal in
an RESP. Should you die, your beneficiaries would receive a $2,500 death benefit lump-sum
payment from the Canada Pension Plan. You also have $35,000 in your company pension plan.
Average funeral expenses are $13,800. Your other financial assets are as follows:
Bank accounts
$ 3,100
4,000
Term deposits (3 months)
TFSA High Interest Savings
2,000
3,500
Stock investment account
RRSPS
10,500
Use the family-need method to determine your life insurance needs. Dependents need 4 years of
income as living expense. Assume that there is a desire to have a 3-month reserve based on their
annual income.
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