Styles 4. Jeff, age 50, is thinking of purchasing a S100,000 permanent life insurance policy to fund a gift to his local hospital. He was recently treated there after an automobile accident. He does not expect the policy to be surrendered for a number of years and is concerned that inflation might erode the value of his gift. Which of the following products would best suit Jeff's needs? (A) A whole life participating policy with dividends used to reduce the annual premium. (B) A term to 100 life insurance policy. (C) A whole life participating policy with a paid-up additions dividend option. (D) A whole life non-participating policy.

Styles 4. Jeff, age 50, is thinking of purchasing a S100,000 permanent life insurance policy to fund a gift to his local hospital. He was recently treated there after an automobile accident. He does not expect the policy to be surrendered for a number of years and is concerned that inflation might erode the value of his gift. Which of the following products would best suit Jeff's needs? (A) A whole life participating policy with dividends used to reduce the annual premium. (B) A term to 100 life insurance policy. (C) A whole life participating policy with a paid-up additions dividend option. (D) A whole life non-participating policy.

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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Deciding between traditional and Roth IRAs. Elijah James is in his early 30s and is thinking about opening an IRA. He can’t decide whether to open a traditional/deductible IRA or a Roth IRA, so he turns to you for help. To support your explanation, you decide to run some comparative numbers on the two types of accounts; for starters, use a 25-year period to show Elijah what contributions of $5,500 per year will amount to (after 25 years) if he can earn, say, 10 percent on his money. Will the type of account he opens have any impact on this amount? Explain. Assuming that Elijah is in the 22 percent tax bracket (and will remain there for the next 25 years), determine the annual and total (over 25 years) tax savings he’ll enjoy from the $5,500-a-year contributions to his IRA. Contrast the (annual and total) tax savings he’d generate from a traditional IRA with those from a Roth IRA. Now, fast-forward 25 years. Given the size of Elijah’s account in 25 years (as computed in part a),…
Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $16,000 per month for 25 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $375,000. Third, after he passes on at the end of the 25 years of withdrawals, he would like to leave an inheritance of $1.5 million to his nephew Frodo. He can afford to save $2,150 per month for the next 10 years. If he can earn an EAR of 10 percent before he retires and an EAR of 7 percent after he retires, how much will he have to save each month in Years 11 through 30? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
An engineer is considering buying a life insurance policy for his family. He currently owes $65,000 and he would like his family to have an annual available income of $50,000 indefinitely. If the engineer assumes that any money from the insurance policy can be invested in an account paying a guaranteed 5% annual interest, how much life insurance should he buy? $1,000,000 $1,065,000 ● $2,000,000 $2,130,000
You and your spouse are in good health and have reasonably secure careers. Each of you makes about $40,000 annually. You own a home with an $80,000 mortgage, and you owe $15,000 on car loans, $5,000 on personal debts, and $4,000 on credit card loans. You have no other debt. You have no plans to increase the size of your family in the near future. Estimate your insurance needs using the DINK method. Show work!
Amanda Weet who is six years old has been gifted $100,000 (after-tax) towards a college fund. Her parents do not have the ability to add any other amounts to the fund and a good four-year college education will cost about $71,000 per-year in ten years from now. What rate of return should she earn to be able to withdraw $71,000 at the end of 10th, 11th, 12th, and 13th year respectively. (Hint: IRR problem, draw a time line)
6) Stephanie suggests to George that they can reduce the amount of interest they pay over the life of the loan by simply making his monthly repayments at the start of each month rather than at the end. Is Stephanie correct? Explain why/why not using calculations to prove your response.please Show formula, variables, calculations and a concluding statement in your response.
Bhupatbhai
Jimmy recently graduated from medical school and is working for a hospital system. He is not worried about his medical school debt because it is relatively low compared to his income, but he would like to begin saving and investing for his children's college education, his retirement, and the purchase of a family home. He is also concerned about protecting his family financially if something were to happen to him. Which of the following financial professionals would be the best option for Jimmy? Question 8 options: Stockbroker. Insurance agent. Certified Financial Planner® Accredited Financial Counselor.
H
Jeremiah Wood wants to set up a fund to pay for his daughter's education. In order to pay her expenses, he will need $22,000 in four years, $23,400 in five years, $24,600 in six years, and $26,100 in seven years. If he can put money into a fund that pays 5 percent interest, what lump-sum payment must Jeremiah place in the fund today to meet his college funding goals? Round the answer to the nearest cent. Round PV-factor to three decimal places.
4. Mr. Richman has offered to give the New Life Hospice Center $100,000 today or $300,000 when he dies. If the hospice center earns 14% on its investments, and it expects Mr. Richman to live for 12 years, which alternative should they take? Take the gift now or later? Discuss in narrative and include your calculations and citations with your answer.
(Related to Checkpoint 5.5) (Solving for n) Jack asked Jill to marry him, and she has accepted under one condition: Jack must buy her a new $350,000 Rolls-Royce Phantom. Jack currently has $18,570 that he may invest. He has found a mutual fund with an expected annual return of 7 percent in which he will place the money. How long will it take Jack to win Jill's hand in marriage? Ignore taxes and inflation. The number of years it will take for Jack to win Jill's hand in marriage is years. (Round to one decimal place.)

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