Suppose that you earn $50,000annually. You expect expenses todrop by 22% for your family inthe eventof your death.Currently, if you die, you want toprovide for your family for atleast 15 more years, andtheapplicable after-tax andinflation return assumed is 5%.Using the earnings multipleapproach provided inyourtextbook, what would be theamount of life insurance that youshould purchase?

If you die you want to provide your family with = 50000 - 0.22*50000 = 39000$39000 every year for 15…

Answered: Suppose that you earn $50,000 annually.…

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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Similar questions

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You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a lump sum of $400,000 today or receive payments of $16,000 a year for 15 years. You can earn 6 percent on your money. Which option should you take and why?
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None
To help with a down payment on a home, Elsa is going to invest. Assuming an interest rate of 1.73% compounded annually, how much would she have to invest to have $36,800 after 7 years? Do not round any intermediate computations, and round your final answer to the nearest dollar. If necessary, refer to the list of financial formulas. $0 S oo E D
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