Problem 3-23 Long-Life Insurance has developed a linear model that it uses to de

Question

Problem 3-23

Long-Life Insurance has developed a linear model that it uses to determine the amount of term life insurance a family of four should have, based on the current age of the head of the household. The equation is:

y = 158 -0.20x

where

y = Insurance needed ($000)
x = Current age of head of household

b. Use the equation to determine the amount of term life insurance to recommend for a family of four if the head of the household is 48 years old. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Amount of term life insurance _________ $  thousands

Explanation / Answer

Equation: y= 158 - 0.2x

Current age of head of household = x = 48.

Putting x in equation,

Y = 158 - 0.2 * 48 = 158 + 9.6 = 167.6

Therefore, Amount of term life insurance = $ 167,600

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