Joetta Hernandez is a single parent with two children and earns $67,500 a year. Her employer's group life insurance policy would pay 2.5 times her salary. She also has $90,000 saved in a 401(k) plan, $7,500 in mutualfunds, and a $4,500 certificate of deposit. She wants to purchase term life insurance for 15 years until her youngest child is self-supporting. She is not concerned about her outstanding mortgage, as the children would live with her sister in the event of Joetta's death. Assuming she can receive a 6 percent after-tax, after-inflation return on insurance proceeds, use the earnings multiple method to calculate her insurance need. How much more insurance does Joetta need to buy? What other information would you need to know to use the needs approach to calculate Joetta's insurance coverage? Assuming she can receive a 6% after-tax, after-inflation return on insurance proceeds and using the earnings multiple method, Joetta's insurance need is $_____ Present Value of a Series of Annual Deposits (annuity), Present-Value Interest Factor of an Annuity4%5%9%0.9620.9520.9171.8861.8591.7592.7752.7232.5313.6303.5463.2404.4524.3293.8905,2425.0764.4866.0025.7865.0336.7336.4637.4357.1088.1117.7228.3068.8639.3949.89910.38010.83811.274n123456789101112131415161718192021222324253040501%0.9901.9702.9413.9024.8535.7956.7287.6528.5669.47110.36811.25512.13413.00413.86514.71815.56216.39817.22618.04618.85719.66020.45621.24322.02325.80832.83539.1962%0.9801.9422.8843.8084.7135.6016.4727.3258.1628.9839.78710.57511.34812.10612.84913.57814.29214.99215.67816.35117.01117.65818.29218.91419.52322.39627.35531.4243%0.9711.9132.8293.7174.5805.4176.2307,0207.7868.5309.2539.95410.63511.29611.93812.56113.16613.75414.32414.87715.41515.93716.44416.93617.41319.60023.11525.7308.7609.3859.98610.56311.11811.65212.16612.65913.13413.59014.02914.45114.85715.24715.62217.29219.79321.48211.69012.08512.46212.82113.16313.48913.79914.09415.37217.15918.2566%0.9431.8332.6733.4654.2124.9175.5826.2106.8027.3607.8878.3848.8539.2959.71210.10610.47710.82811.15811.47011.76412,04212.30312.55012.78313.76515.04615.7627%0.9351.8082.6243.3874.1004.7675.3895.9716.5157.0247.4997.9438.3588.7459.1089.4479.76310.05910.33610.59410.83611.06111.27211.46911.65412.40913.33213.8018%0.9261.7832.5773.3123.9934.6235.2065.7476.2476.7107.1397.5367.9048.2448.5598.8519.1229.3729.6049.81810.01710.20110.37110.52910.67511.25811.92512.2335.5355.9956.4186.8057.1617.4877.7868.0618.3138.5448.7568.9509.1299.2929.4429.5809.7079.82310.27410.75710.96210%0.9091.7362.4873.1703.7914.3554.8685.3355.7596.1456.4956.8147.1037.3677.6067.8248.0228.2018.3658.5148.6498.7728.8838.9859.0779.4279.7799.915 Joetta Hernandez is a single parent with two children and earns $67,500 a year. Her employer's group life insurance policy would pay 2.5 times her salary. She also has $90,000 saved in a 401(k)plan, $7,500 in mutual funds, and a $4,500 certificate of deposit. She wants to purchase term life insurance for 15 years, until her youngest child is self-supporting. She is not concerned about heroutstanding mortgage, as the children would live with her sister in the event of Joetta's death. Assuming she can receive a 6 percent after-tax, after-inflation return on insurance proceeds, use theearnings multiple method to calculate her insurance need. How much more insurance does Joetta need to buy? What other information would you need to know to use the needs approach tocalculate Joetta's insurance coverage?Click on the table icon to view the PVIFA table:Assuming she can receive a 6% after-tax, after-inflation return on insurance proceeds and using the earnings multiple method, Joetta's insurance need is $(Round to the nearest dollar.)

As per the given information: Earning = $67,500 Employer's group life insuarnce policy would pay -…

Answered: Joetta Hernandez is a single parent…

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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Joetta Hernandez is a single parent with two children and earns $67,500 a year. Her employer's group life insurance policy would pay 2.5 times her salary. She also has $90,000 saved in a 401(k) plan, $7,500 in mutualfunds, and a $4,500 certificate of deposit. She wants to purchase term life insurance for 15 years until her youngest child is self-supporting. She is not concerned about her outstanding mortgage, as the children would live with her sister in the event of Joetta's death. Assuming she can receive a 6 percent after-tax, after-inflation return on insurance proceeds, use the earnings multiple method to calculate her insurance need. How much more insurance does Joetta need to buy? What other information would you need to know to use the needs approach to calculate Joetta's insurance coverage?

Assuming she can receive a 6% after-tax, after-inflation return on insurance proceeds and using the earnings multiple method, Joetta's insurance need is $_____

Present Value of a Series of Annual Deposits (annuity), Present-Value Interest Factor of an Annuity
4%
5%
9%
0.962
0.952
0.917
1.886
1.859
1.759
2.775
2.723
2.531
3.630
3.546
3.240
4.452
4.329
3.890
5,242
5.076
4.486
6.002
5.786
5.033
6.733
6.463
7.435
7.108
8.111
7.722
8.306
8.863
9.394
9.899
10.380
10.838
11.274
n
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
40
50
1%
0.990
1.970
2.941
3.902
4.853
5.795
6.728
7.652
8.566
9.471
10.368
11.255
12.134
13.004
13.865
14.718
15.562
16.398
17.226
18.046
18.857
19.660
20.456
21.243
22.023
25.808
32.835
39.196
2%
0.980
1.942
2.884
3.808
4.713
5.601
6.472
7.325
8.162
8.983
9.787
10.575
11.348
12.106
12.849
13.578
14.292
14.992
15.678
16.351
17.011
17.658
18.292
18.914
19.523
22.396
27.355
31.424
3%
0.971
1.913
2.829
3.717
4.580
5.417
6.230
7,020
7.786
8.530
9.253
9.954
10.635
11.296
11.938
12.561
13.166
13.754
14.324
14.877
15.415
15.937
16.444
16.936
17.413
19.600
23.115
25.730
8.760
9.385
9.986
10.563
11.118
11.652
12.166
12.659
13.134
13.590
14.029
14.451
14.857
15.247
15.622
17.292
19.793
21.482
11.690
12.085
12.462
12.821
13.163
13.489
13.799
14.094
15.372
17.159
18.256
6%
0.943
1.833
2.673
3.465
4.212
4.917
5.582
6.210
6.802
7.360
7.887
8.384
8.853
9.295
9.712
10.106
10.477
10.828
11.158
11.470
11.764
12,042
12.303
12.550
12.783
13.765
15.046
15.762
7%
0.935
1.808
2.624
3.387
4.100
4.767
5.389
5.971
6.515
7.024
7.499
7.943
8.358
8.745
9.108
9.447
9.763
10.059
10.336
10.594
10.836
11.061
11.272
11.469
11.654
12.409
13.332
13.801
8%
0.926
1.783
2.577
3.312
3.993
4.623
5.206
5.747
6.247
6.710
7.139
7.536
7.904
8.244
8.559
8.851
9.122
9.372
9.604
9.818
10.017
10.201
10.371
10.529
10.675
11.258
11.925
12.233
5.535
5.995
6.418
6.805
7.161
7.487
7.786
8.061
8.313
8.544
8.756
8.950
9.129
9.292
9.442
9.580
9.707
9.823
10.274
10.757
10.962
10%
0.909
1.736
2.487
3.170
3.791
4.355
4.868
5.335
5.759
6.145
6.495
6.814
7.103
7.367
7.606
7.824
8.022
8.201
8.365
8.514
8.649
8.772
8.883
8.985
9.077
9.427
9.779
9.915

Joetta Hernandez is a single parent with two children and earns $67,500 a year. Her employer's group life insurance policy would pay 2.5 times her salary. She also has $90,000 saved in a 401(k)
plan, $7,500 in mutual funds, and a $4,500 certificate of deposit. She wants to purchase term life insurance for 15 years, until her youngest child is self-supporting. She is not concerned about her
outstanding mortgage, as the children would live with her sister in the event of Joetta's death. Assuming she can receive a 6 percent after-tax, after-inflation return on insurance proceeds, use the
earnings multiple method to calculate her insurance need. How much more insurance does Joetta need to buy? What other information would you need to know to use the needs approach to
calculate Joetta's insurance coverage?
Click on the table icon to view the PVIFA table:
Assuming she can receive a 6% after-tax, after-inflation return on insurance proceeds and using the earnings multiple method, Joetta's insurance need is $
(Round to the nearest dollar.)

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