Amount of Insurance Needed. Peter is married and has two children. He wants to be sure that he has sufficient life insurance to take care of his family if he dies. Peter's wife is a homemaker but attends college part-time pursuing a law degree. It will cost approximately $38,269 for her to finish her education. Since the children are teenagers, Peter feels he will only need to provide the family with income for the next 10 years. He further calculates that the household expenses run approximately $31,000 per year excluding the mortgage payments. The balance on the home mortgage is $27,185. Peter set up a college fund for his children when they were babies, and it currently contains sufficient funds for them to attend college. Assuming that Peter's wife can invest the insurance proceeds at 7%, calculate the amount of insurance Peter needs to purchase. The amount of life insurance Peter would need to purchase is $ (Round to the nearest dollar.)
Amount of Insurance Needed. Peter is married and has two children. He wants to be sure that he has sufficient life insurance to take care of his family if he dies. Peter's wife is a homemaker but attends college part-time pursuing a law degree. It will cost approximately $38,269 for her to finish her education. Since the children are teenagers, Peter feels he will only need to provide the family with income for the next 10 years. He further calculates that the household expenses run approximately $31,000 per year excluding the mortgage payments. The balance on the home mortgage is $27,185. Peter set up a college fund for his children when they were babies, and it currently contains sufficient funds for them to attend college. Assuming that Peter's wife can invest the insurance proceeds at 7%, calculate the amount of insurance Peter needs to purchase. The amount of life insurance Peter would need to purchase is $ (Round to the nearest dollar.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Amount of Insurance Needed. Peter is married and has two children. He wants to be sure that he has sufficient life
insurance to take care of his family if he dies. Peter's wife is a homemaker but attends college part-time pursuing a law
degree. It will cost approximately $38,269 for her to finish her education. Since the children are teenagers, Peter feels
he will only need to provide the family with income for the next 10 years. He further calculates that the household
expenses run approximately $31,000 per year excluding the mortgage payments. The balance on the home mortgage is
$27,185. Peter set up a college fund for his children when they were babies, and it currently contains sufficient funds for
them to attend college. Assuming that Peter's wife can invest the insurance proceeds at 7% , calculate the amount of
insurance Peter needs to purchase.
The amount of life insurance Peter would need to purchase is $
(Round to the nearest dollar.)
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