Alexa is a 35-year-old accountant who earns $70,000 per year. She is married and has 3 children. She expects her salary to increase at an annual rate of 5% until her retirement at age 70 and anticipates that inflation will average 3% per year. During this time period, Alexa expects to earn 6% on her investments. Alexa and her husband's income places them in the 25% average tax bracket (including state and federal), and she uses 20% of her after-tax income for personal consumption. Using the Human-Life Value Approach, how much life insurance should Alexa purchase for herself? A. $1,348,130 B. $624,925 C. $687,716 D. $1,059.598
Alexa is a 35-year-old accountant who earns $70,000 per year. She is married and has 3 children. She expects her salary to increase at an annual rate of 5% until her retirement at age 70 and anticipates that inflation will average 3% per year. During this time period, Alexa expects to earn 6% on her investments. Alexa and her husband's income places them in the 25% average tax bracket (including state and federal), and she uses 20% of her after-tax income for personal consumption. Using the Human-Life Value Approach, how much life insurance should Alexa purchase for herself? A. $1,348,130 B. $624,925 C. $687,716 D. $1,059.598
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
am. 105.
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!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education