Chris and Lisa have a newborn child and are shopping for life insurance. Chris earns $90000 a year and Lisa cares for their child. Theyhave a $370000 mortgage with 20 years remaining and are concerned if something were to happen to Chris, how their family canmanage. If they wish to cover the family expenses until the child turns 20, approximately how much term insurance would theypurchase? (Assume the expected annual return is 5%)Ⓒ $1270000.Ⓒ $900000.O $751600.O $1121600.

Term insurance is life insurance policy in which the amount is paid in the event of death of person…

Answered: Chris and Lisa have a newborn child and…

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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Norm and Tanya earn about the same salary and are undertaking a life insurance needs analysis for one of them passing away. If the nominal projected investment return is an average of 8% per annum, inflation is projected at 3% per annum, then find the amount of additional insurance they should purchase, given the following data: Number of years insurance money should last 30 Net Worth $33,257 CPP Survivor Benefit $400 per month Salary $45,000 Lifestyle Expenses (after mortgage) will continue at full amount $5,000 per month Additional funds for emergency, vacation & taxes $35,000 Funeral expenses $20,000 Current group insurance coverage from employer 1 x Salary Enter your answer rounded to 2 decimal places, and do not enter any symbols such as $, % or commas.
out tion Johnny wants to save some money for his daughter Alexis's education. Tuition costs $12,500 per year in today's dollars. Alexis was born today and will go to school starting at age 18. She will go to school for 4 years. Johnny can earn 11% on his investments and tuition inflation is 7%. How much must Johnny save at the end of each year, if he wants to make his last savings payment at the beginning of his daughter's first year of college? O a. $2,694.56. b. $2,789.04. * $2,861.65. O d. $3,176.43. OC
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Alex wants to provide funding in the event of his death for his daughter Ellie, age 8, to attend four years of college, starting at age 18. The current annual cost of tuition is $20,000. Assume inflation of 6.5% and after-tax earnings of 7%. If Alex wants to have enough life insurance to assure adequate funds for Ellie when she begins college (should he die today), approximately how much insurance should he have for this need alone? (Round your answer to the nearest dollar.) A)$113,764 B)$75,806 C)$75,451 D)$79,441
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Part B) Suppose karen has $2000 each month that she can allocate between mortgage payments and retirement. That is, if she pays $1200 toward her mortgage, then she can put the remaining $800 into her retirement account each month. She plans to retire in 30 years. If she goes with the 15 year home loan, then the first 15 years she will have to split the $2000 between mortgage and retirement, but then the last 15 years she can put all $2000 into her retirement account. If she goes with the 20 year home loan, then the first 20 years she will have to split the $2000 between mortgage and retirement, but then the last 10 years she can put all $2000 into her retirement account. If she goes with the 30 year home loan, then she will split the $2000 between mortgage and retirement for all 30 years. Her best retirement option offers her a nominal rate of 5.5%, compounded monthly. Calculate the value of her retirement account in 30 years under each of the 3 plans. Which plan will give her the…
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