You and your spouse just adopted twin girls, little Heather and Beth. You want to make sure they are taken care of for the next 22 years. (A)Based on the following information, how much life insurance needs to be purchased for the husband using the income approach, if any? (B) How much, if any, needs to be purchased for the wife using the income approach? Assume 3% inflation rate. Market Labor ValueHousehold Production ValueHusband$72,000$15,000Wife$15,000$40,000

The value of insurance can be calculated by using the following formula.a. Substitute the respective values in Equation (1) to calculate the life insurance value of the husband. The value of insurance is $1,386,510.3.b. Substitute the respective values in Equation (1) to calculate the life insurance value of the husband. The value of insurance is $876,529.5.

Answered: You and your spouse just adopted twin…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You and your spouse just adopted twin girls, little Heather and Beth. You want to make sure they are taken care of for the next 22 years. (A)Based on the following information, how much life insurance needs to be purchased for the husband using the income approach, if any? (B) How much, if any, needs to be purchased for the wife using the income approach? Assume 3% inflation rate.

	Market Labor Value	Household Production Value
Husband	$72,000	$15,000
Wife	$15,000	$40,000

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