Susan has purchased a whole life policy with a death benefit of $400,000. Assuming that she dies in 9 years and the average inflation has been 4 percent, what is the value of the purchasing power of the proceeds? I need help using appropriate factor(s) from the tables provided & rounding time value factor to 3 decimal places and final answer to 2 decimal places. Purchasing power of proceeds = ???

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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Susan has purchased a whole life policy with a death benefit of $400,000. Assuming that she dies in 9 years and the average inflation has been 4 percent, what is the value of the purchasing power of the proceeds?

I need help using appropriate factor(s) from the tables provided & rounding time value factor to 3 decimal places and final answer to 2 decimal places.

Purchasing power of proceeds = ???

 

Exhibit 1-B Future Value (Compounded Sum) of $1 Paid In at the End of Each Period for a Given Number of Time Periods (an Annuity)
Period
1
3%
1.000
2.030
4%
1.000
2.040
3.091
3.122
4.184
4.246
5.309
5.416
6.468
6.633
7.662
7.898
8.892
9.214
10.159
11.464
12.808
14.192
15.618
17.086
18.599
20.157
21.762
23.414
25.117
26.870
36.459
47.575
75.401
112.797
2
3
4
5
6
7
8
9
OHNMASSI
10
11
12
13
14
15
16
17
18
19
20
25
30
40
50
1%
1.000
2.010
3.030
4.060
5.101
6.152
7.214
8.286
9.369
10.462
11.567
12.683
13.809
14.947
16.097
17.258
18.430
19.615
20.811
22.019
28.243
34.785
48.886
64.463
2%
1.000
2.020
3.060
4.122
5.204
6.308
7.434
8.583
9.755
10.950
12.169
13.412
14.680
15.974
17.293
18.639
20.012
21.412
22.841
24.297
32.030
40.568
60.402
84.579
10.583
12.006
13.486
15.026
16.627
18.292
20.024
21.825
23.698
25.645
27.671
29.778
41.646
56.085
95.026
152.667
5%
1.000
2.050
3.153
4.310
5.526
6.802
8.142
9.549
11.027
12.578
14.207
15.917
17.713
19.599
21.579
23.657
25.840
28.132
30.539
33.066
47.727
66.439
120.800
209.348
6%
1.000
2.060
3.184
4.375
5.637
6.975
8.394
9.897
11.491
13.181
14.972
16.870
18.882
21.015
23.276
25.673
28.213
30.906
33.760
36.786
54.865
79.058
154.762
290.336
7%
1.000
2.070
3.215
4.440
5.751
7.153
8.654
10.260
11.978
13.816
15.784
17.888
20.141
22.550
25.129
27.888
30.840
33.999
37.379
40.995
63.249
94.461
199.635
406.529
8%
1.000
2.080
3.246
4.506
5.867
7.336
8.923
10.637
12.488
14.487
16.645
18.977
21.495
22.953
24.215
26.019
29.361
27.152
30.324
33.003
36.974
33.750
37.450
41.301
41.446
46.018
45.762
51.160
73.106
84.701
113.283
136.308
337.882
259.057
573.770 815.084 1,163.909 1,668.771
9%
1.000
2.090
3.278
4.573
5.985
7.523
9.200
11.028
13.021
15.193
17.560
20.141
10%
1.000
2.100
3.310
4.641
6.105
7.716
9.487
11.436
13.579
15.937
18.531
21.384
24.523
27.975
31.772
35.950
40.545
45.599
51.159
57.275
98.347
164.494
442.593
11%
1.000
2.110
3.342
4.710
6.228
7.913
9.783
11.859
14.164
16.722
19.561
22.713
26.212
30.095
34.405
39.190
44.501
50.396
56.939
64.203
114.413
199.021
581.826
Transcribed Image Text:Exhibit 1-B Future Value (Compounded Sum) of $1 Paid In at the End of Each Period for a Given Number of Time Periods (an Annuity) Period 1 3% 1.000 2.030 4% 1.000 2.040 3.091 3.122 4.184 4.246 5.309 5.416 6.468 6.633 7.662 7.898 8.892 9.214 10.159 11.464 12.808 14.192 15.618 17.086 18.599 20.157 21.762 23.414 25.117 26.870 36.459 47.575 75.401 112.797 2 3 4 5 6 7 8 9 OHNMASSI 10 11 12 13 14 15 16 17 18 19 20 25 30 40 50 1% 1.000 2.010 3.030 4.060 5.101 6.152 7.214 8.286 9.369 10.462 11.567 12.683 13.809 14.947 16.097 17.258 18.430 19.615 20.811 22.019 28.243 34.785 48.886 64.463 2% 1.000 2.020 3.060 4.122 5.204 6.308 7.434 8.583 9.755 10.950 12.169 13.412 14.680 15.974 17.293 18.639 20.012 21.412 22.841 24.297 32.030 40.568 60.402 84.579 10.583 12.006 13.486 15.026 16.627 18.292 20.024 21.825 23.698 25.645 27.671 29.778 41.646 56.085 95.026 152.667 5% 1.000 2.050 3.153 4.310 5.526 6.802 8.142 9.549 11.027 12.578 14.207 15.917 17.713 19.599 21.579 23.657 25.840 28.132 30.539 33.066 47.727 66.439 120.800 209.348 6% 1.000 2.060 3.184 4.375 5.637 6.975 8.394 9.897 11.491 13.181 14.972 16.870 18.882 21.015 23.276 25.673 28.213 30.906 33.760 36.786 54.865 79.058 154.762 290.336 7% 1.000 2.070 3.215 4.440 5.751 7.153 8.654 10.260 11.978 13.816 15.784 17.888 20.141 22.550 25.129 27.888 30.840 33.999 37.379 40.995 63.249 94.461 199.635 406.529 8% 1.000 2.080 3.246 4.506 5.867 7.336 8.923 10.637 12.488 14.487 16.645 18.977 21.495 22.953 24.215 26.019 29.361 27.152 30.324 33.003 36.974 33.750 37.450 41.301 41.446 46.018 45.762 51.160 73.106 84.701 113.283 136.308 337.882 259.057 573.770 815.084 1,163.909 1,668.771 9% 1.000 2.090 3.278 4.573 5.985 7.523 9.200 11.028 13.021 15.193 17.560 20.141 10% 1.000 2.100 3.310 4.641 6.105 7.716 9.487 11.436 13.579 15.937 18.531 21.384 24.523 27.975 31.772 35.950 40.545 45.599 51.159 57.275 98.347 164.494 442.593 11% 1.000 2.110 3.342 4.710 6.228 7.913 9.783 11.859 14.164 16.722 19.561 22.713 26.212 30.095 34.405 39.190 44.501 50.396 56.939 64.203 114.413 199.021 581.826
Exhibit 1-A Future Value (Compounded Sum) of $1 after a Given Number of Time Periods
1%
1.010
7%
1.070
1.020
1.145
1.030
1.225
1.041
1.311
1.051
1.403
1.062
1.501
1.072
1.606
1.083
1.718
1.094
1.838
1.105
1.967
1.116
2.105
1.127
2.252
1.138
2.410
1.149
2.579
2.759
2.952
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
85
25
30
40
50
1.161
1.173
1.184
1.196
1.208
1.220
1.282
1.348
...
1.489
1.645
2%
1.020
1.040
1.061
1.082
1.104
1.126
1.149
1.172
1.195
1.219
1.243
1.268
1.294
1.319
1.346
1.373
1.400
1.428
1.457
1.486
1.641
1.811
2.208
2.692
3%
1.030
1.061
1.093
1.126
1.159
1.194
1.230
1.267
1.305
1.344
1.384
1.426
1.469
1.513
1.558
1.605
1.653
1.702
1.754
1.806
2.094
2.427
3.262
4.384
4%
1.040
1.082
1.125
1.170
1.217
1.265
1.316
1.369
1.423
1.480
1.539
1.601
1.665
1.732
1.801
1.873
1.948
2.026
2.107
2.191
2.666
3.243
4.801
7.107
5%
1.050
1.103
1.158
1.216
1.276
1.340
1.407
1.477
1.551
1.629
1.710
1.796
1.886
1.980
2.079
2.183
2.292
2.407
2.527
2.653
3.386
4.322
7.040
11.467
6%
1.060
1.124
1.191
1.262
1.338
1.419
1.504
1.594
1.689
1.791
1.898
2.012
2.133
2.261
2.397
2.540
2.693
2.854
3.026
3.207
4.292
5.743
10.286
18.420
3.159
3.380
3.617
3.870
5.427
7.612
8%
1.080
1.166
1.260
1.360
1.469
1.587
1.714
1.851
1.999
2.159
2.332
2.518
2.813
2.720
3.066
2.937
3.342
3.172
3.642
3.426
3.970
3.700
4.328
3.996
4.717
4.316
5.142
4.661
5.604
6.848
8.623
10.063 13.268
21.725 31.409
9%
1.090
1.188
1.295
1.412
1.539
1.677
1.828
1.993
2.172
2.367
2.580
14.974
29.457 46.902
10%
1.100
1.210
1.331
11%
1.110
1.232
1.368
1.518
1.685
1.870
2.076
2.305
2.558
2.839
3.152
3.498
3.883
4.310
4.177
4.785
4.595
5.311
5.054
5.895
5.560
6.544
6.116
7.263
6.727
8.062
10.835
13.585
17.449
22.892
45.259
65.001
74.358 117.391 184.565
1.464
1.611
1.772
1.949
2.144
2.358
2.594
2.853
3.138
3.452
3.797
Transcribed Image Text:Exhibit 1-A Future Value (Compounded Sum) of $1 after a Given Number of Time Periods 1% 1.010 7% 1.070 1.020 1.145 1.030 1.225 1.041 1.311 1.051 1.403 1.062 1.501 1.072 1.606 1.083 1.718 1.094 1.838 1.105 1.967 1.116 2.105 1.127 2.252 1.138 2.410 1.149 2.579 2.759 2.952 Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 85 25 30 40 50 1.161 1.173 1.184 1.196 1.208 1.220 1.282 1.348 ... 1.489 1.645 2% 1.020 1.040 1.061 1.082 1.104 1.126 1.149 1.172 1.195 1.219 1.243 1.268 1.294 1.319 1.346 1.373 1.400 1.428 1.457 1.486 1.641 1.811 2.208 2.692 3% 1.030 1.061 1.093 1.126 1.159 1.194 1.230 1.267 1.305 1.344 1.384 1.426 1.469 1.513 1.558 1.605 1.653 1.702 1.754 1.806 2.094 2.427 3.262 4.384 4% 1.040 1.082 1.125 1.170 1.217 1.265 1.316 1.369 1.423 1.480 1.539 1.601 1.665 1.732 1.801 1.873 1.948 2.026 2.107 2.191 2.666 3.243 4.801 7.107 5% 1.050 1.103 1.158 1.216 1.276 1.340 1.407 1.477 1.551 1.629 1.710 1.796 1.886 1.980 2.079 2.183 2.292 2.407 2.527 2.653 3.386 4.322 7.040 11.467 6% 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1.689 1.791 1.898 2.012 2.133 2.261 2.397 2.540 2.693 2.854 3.026 3.207 4.292 5.743 10.286 18.420 3.159 3.380 3.617 3.870 5.427 7.612 8% 1.080 1.166 1.260 1.360 1.469 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.813 2.720 3.066 2.937 3.342 3.172 3.642 3.426 3.970 3.700 4.328 3.996 4.717 4.316 5.142 4.661 5.604 6.848 8.623 10.063 13.268 21.725 31.409 9% 1.090 1.188 1.295 1.412 1.539 1.677 1.828 1.993 2.172 2.367 2.580 14.974 29.457 46.902 10% 1.100 1.210 1.331 11% 1.110 1.232 1.368 1.518 1.685 1.870 2.076 2.305 2.558 2.839 3.152 3.498 3.883 4.310 4.177 4.785 4.595 5.311 5.054 5.895 5.560 6.544 6.116 7.263 6.727 8.062 10.835 13.585 17.449 22.892 45.259 65.001 74.358 117.391 184.565 1.464 1.611 1.772 1.949 2.144 2.358 2.594 2.853 3.138 3.452 3.797
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