1. A 40 year old man in the U.S has a 0.242% risk of dying during the next year. An insurance company charges $260 per year for a life-insurance policy that pays a $100,000 death benefit. What is the expected value for the person buying the insurance? Round the answer to the nearest dollar.

1. A 40 year old man in the U.S has a 0.242% risk of dying during the next year. An insurance company charges $260 per year for a life-insurance policy that pays a $100,000 death benefit. What is the expected value for the person buying the insurance? Round the answer to the nearest dollar.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: 33. Just before his first attempt at bungee jumping, John decides to buy a life insurance policy.…

A: Present value Present value is the present worth of any sum of a money to be received in the future…

Q: Your client is 36 years old. She wants to begin saving for retirement, with the first payment to…

A: The concept of time value of money will be used. The annual saving of $ 8000 per year is an annuity.…

Q: A life insurance co. is trying to sell you an investment policy that will pay you and your heirs…

A: Perpetuity refers to a financial concept where a stream of cash flows continues indefinitely. It is…

Q: Your grandmother bought an annuity from Great-West Life Insurance Company for $439,002 when she…

A: Time, the value of money refers to the concept used for calculating the future value of an asset…

Q: ou want to buy a home but not take out a mortgage. You want to buy it outright when you are able to…

A: Future value is the value of present cashflow compounded to future date at specified rate. formula:…

Q: Your client is 34 years old. She wants to begin saving for retirement, with the first payment to…

A: To solve this problem, we will use the future value of an annuity formula and the present value of…

Q: You want to be a millionaire when you retire in 40 years. a. How much do you have to save each month…

A: The time value of money is a concept in finance that evaluates the worth of cash flows occurring at…

Q: You have received a settlement from an insurance company which will pay you $100,000 per year for 12…

A: Present Value is the amount of money on hand currently, whereas future value is the amount of…

Q: If the value of the annual payment is $34,059.92, calculate the present value of a life annuity…

A: Present value of an annuity is the cash value of future annuity payments of all the persons, It is…

Q: Suppose that you wish to buy a new home that will cost you $452,847. You must put $80,000 down, and…

A: Negative amortization means interest on the loan is not paid due which the loan amount tends to…

Q: Christina is planning on buying an insurance policy that will pay for $156,750 a year for 25-years,…

A: The time value of money is a concept in finance that takes into account the effect of compounding in…

Q: 5. Mr. Johnson wants to buy insurance against his house burning down. The insurance will pay M…

A: Expected return is amount of profit or loss that is expected to be earned on the annual premium that…

Q: Your client is 38 years old. She wants to begin saving for retirement, with the first payment to…

A: Given: Particulars Client age 38 Savings 5000 Return 10% age 65 age 70

Q: The annual premium for a $5,000 insurance policy against the theft of a painting is $250. If the…

A: Annual premium=$5000Insurance policy against theft=$250Probability of painting stolen=0.01

Q: There is a chance that the things you own, like your computer, phone, clothes etc. are lost due to…

A: Insurance is a form of contract where a company or a government undertakes to compensate for the…

Q: Incorrect Your answer is incorrect. The Barnes family wants to save money to travel the world. They…

A: Future Value of Ordinary Annuity: It represents the future worth of the annuity payments made at…

Q: iple wants to purchase a hom couple will put down a 20% down pa average rate for a 30-year fixed…

A: Calculation of EMI EMI = [P x R x (1+R)^N]/[(1+R)^N-1 Where, P = Loan Amount, R= Rate , N = No. of…

Q: The Real Deal Life Insurance company is offering to you to purchase a policy that will pay you, your…

A: This is a case of perpetuity. A perpetuity is an annuity that lasts forever. Note that an annuity is…

Q: If the guaran

A: The amount to be paid for the policy can be computed as follows :

Q: Suppose that you earn $50,000 annually. You expect expenses to drop by 22% for your family in the…

A: If you die you want to provide your family with = 50000 - 0.22*50000 = 39000$39000 every year for 15…

Q: Suppose you are in charge of annuities for a life insurance company. A customer comes in and wants…

A: Annuity amount =1,000,000 Lets assume Remaining Life =55 years Life in months =660 Interest rate 7%…

Q: Tommy Cook is 19 years old and is interested in purchasing a whole life insurance policy with a face…

A: Since you have posted a question having multiple sub-parts. All sub-parts are solved for you below.

Q: Suppose you deposited $39,000 in a bank account that pays 5.25% WI daily compounding based on a…

A: Future value is the amount initially deposited and amount of comounding interest accumulated over…

Q: You are given the following information about a person aged exactly x: 9x = 0.03, 9x+1 = 0.04, 9x+2…

A: The expected present value is used to find out the value of an investment based on the concept of…

Q: our client is 21 years old. She wants to begin saving for retirement, with the first payment to come…

A: There is a need to plan for retirement and if done on time with proper planning based on time value…

Q: How many years would it take save an adequate amount for retirement if he deposits $2,100 per month…

A: A study that proves that the 1value of money today is higher than the future value of money is term…

Q: Your anticipated wedding is three years from today. You don't know who your spouse will be but you…

A: We are given cash flows at three different points in time. We need to compute the present value of…

Q: Use the following table to calculate the minimum premium an insurance company should charge for a…

A: A financial agreement or contract between an insurance company and a person or entity (the…

Q: e year from now. She can save Rs. 5000 per y ck market., which expect to provide average ret ur…

A: interest rate =9% Period =25 years Annual deposit =5000 Future value FACTOR =(1+r)n-1/r Future…

Q: I am currently 42. If you are going to retire at 65, post-retirement living expenses are $20,000…

A: Time Value of money: The time value of money (TVM) theory states that because of its potential for…

Q: Suppose you have a 1-year old daughter and you want to provide R81 000 in 19 years towards her…

A: Interest rate is the compounding rate which is used to compound present value over a specified…

Q: (Solving for i) An insurance agent just offered you a new insurance product that will provide you…

A: It is a problem that requires calculating the interest rate earned on the investment. The interest…

Q: Suppose you retired at age 65 and your retirement benefits is $50,000 which remains constant for the…

A: Given: Year 1 , PMT = $50000 It grows by 5% till year 25 Rate of interest = 7%

Q: the next 35 years will be te that can be earned on an investment is 6 percent. percent is pald to…

A: The answer is given below: Note: Answering the first three subparts as there are many…

Q: Prudential Life Insurance Co. is trying to sell you an investment policy that will pay you and your…

A: Annual Payment = p = K200,000 Required rate of return = r = 6.5%

Q: Helen is contemplating purchasing a single premium annuity from an insurance company. The insurance…

A: Present value (PV) is the current value of a future sum of money or stream of cash flows at a…

Q: You want to buy a new house. You can afford to pay $15,000 per year for 30 years with the first…

A: Annual payment (A) = $15000 n = 30 years r = 3%

Q: Using the "Human Life Value" method, how much life insurance should you purchase if you have 45…

A: The objective of this question is to calculate the amount of life insurance one should purchase…

Q: Your client is 29 years old. She wants to begin saving for retirement, with the first payment to…

A: Here,YearlySavings is $15,000Interest Rate earned is 8%Current Age is 29 years old.

Q: A taxpayer, age 64, purchases an annuity from an insurance company for $50,000. She is to receive…

A: The expected return is an amount of return or maybe a percentage of return that the investor wants…

Q: Suppose that Paolo is 45 years old and has no retirement savings. He wants to begin saving for…

A: Savings per year = $12,000Average annual return =8%Current age = 45 years

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

An insurance agent just offered you a new insurance product that will provide you with $1,959.20 13 years from now if you invest $400 today. What annual rate of interest would you earn if you invested in this product?
The Maybe Pay Life Insurance Company is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 5.6 percent, how much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
19. Suppose you and your fiancé are planning to get married in 3 years. You figured that you need P 1.2 million for a decent wedding ceremony and reception. How much do you need to save at the end of each year assuming that you can earn an interest of 8%? Use 2 decimal places for your final answer
ii. If a life insurance company insures 50 females age 25 for $40,000, 10- year term policies, how much would they expect to pay out? Solve
Your client is 32 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $7,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 11% in the future. a. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. How much will she have at 70? Do not round intermediate calculations, Round your answer to the nearest cent. 2$ c. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round intermediate calculations. Round your answers to the nearest cent. Annual withdrawals if she retires at 65: $ Annual withdrawals if she retires at 70: $
I am 40 years old. If you are going to retire at 65, post-retirement living expenses are $20,000 annual, an average annual market return of 6%, life expectancy of 90. How much do you need to save for your retirement? (Please use the TVM calculation to solve for this question, and your answers would be different because your age varies.)
None
8.
Your client is 38 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $14,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 8% in the future. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent. $ How much will she have at 70? Do not round intermediate calculations. Round your answer to the nearest cent. $ She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round intermediate calculations. Round your answers to the nearest cent. Annual withdrawals if she retires at 65: $ Annual withdrawals if she retires at 70: $
Your client is 31 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $14,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 11% in the future. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent. $ How much will she have at 70? Do not round intermediate calculations. Round your answer to the nearest cent. $ She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round intermediate calculations. Round your answers to the nearest cent. Annual withdrawals if she retires at 65: $ Annual withdrawals if she retires at 70: $
Bhupatbhai
If a life insurance company insures 50 females age 25 for $40,000, 10- year term policies, how much would they expect to pay out?Solve