Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Chapter 9, Problem 3FPE
Summary Introduction
To discuss: The best plan and the alternative plans for Person and family.
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Shen and Sondra Xiang are 37 years old and have one daughter, age 5. Shen is the primary earner, making $87,000 per year. Sondra does not currently work. The Xiangs have decided to use the needs analysis method to calculate the value of a life insurance policy that would provide for Sondra and their daughter in the event of Shen’s death.
Shen and Sondra estimate that while their daughter is still living at home, monthly living expenses for Sondra and their child will be about $3,700 (in current dollars). After their daughter leaves for college in 13 years, Sondra will need a monthly income of $3,100 until she retires at age 65. The Xiangs estimate Sondra’s living expenses after 65 will only be $2,700 a month. The life expectancy of a woman Sondra’s age is 87 years, so the Xiang family calculates that Sondra will spend about 22 years in retirement.
Using this information, complete the first portion of the needs analysis worksheet to estimate their total living expenses.
Life Insurance…
Luis Barillas and his wife, Dora, have been married for two years and have a 1-year-old son. They live in Charlotte, North Carolina, where Luis works for Advanced Marketing Analytics. He earns $ 3,200 per month, of which he takes home $ 2,300. Luis and his family are entitled to receive the benefits provided by the company's group health insurance policy. In addition to major medical coverage, the policy provides a monthly disability income benefit amounting to 20 percent of the employee's average monthly take-home pay for the most recent 12 months prior to incurring the disability. ( Note: Luis' average monthly take-home pay for the most recent year is equal to his current monthly take-home pay.) In case of complete disability, Luis would also be eligible for Social Security payments of $ 600 per month.
Dora is also employed. She earns $ 600 per month after taxes by working part-time at a nearby grocery store. As a part-time employee, the store gives her no benefits. Should Luis…
Mark and Parveen are the parents of three young children. Mark is a store manager in a local supermarket. His
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Chapter 9 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
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