Personal Finance, 5th Edition Chapter 13, Problem 3CQ Given the total amount of

Question

Personal Finance, 5th Edition

Chapter 13, Problem 3CQ

Given the total amount of insurance coverage needed and Dave’s present age (30 years old), estimate the premium that the Sampsons would pay using one of the insurance Web sites mentioned in the chapter (www.insure.com or finance.yahoo.com/insurance).

-The annual amount is $40,000, Number of years is 15, Annual interest rate is 6%, and the Present Value is $388,480.

-Coverage for $40,000 in annual benefits + $330,000 additional charges= Total insurance coverage. $388,480 + $330,000= $718,480. Dave needs a total of $718,480 in life insurance coverage.

Explanation / Answer

Answer: PV of an annuity=$40000*PVIFA(0.06,15)

=$40000*9.712

=$388480

Total insurance coverage=Coverage for $40000 in annual benefits + $330,000 additional charges

=$388480+$330000

=$718480

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.