For life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account. Consider the following insurance company options. Company 1: pays 4.2% compounded monthly on the cash value of their policies Company 2: pays 4.21% compounded semiannually on the cash value of their policies

Using Table 19-1 and Table 19-2, calculate the annual, semiannual, quarterly, and monthly premiums (in $) for the life insurance policy. Round your answers to the nearest cent. Age 18 19 20 21 22 Face Value of Policy 23 24 25 26 27 28 29 30 TABLE 19-1 Annual Life Insurance Premiums (per $1,000 of Face Value) 35 40 $45,000 45 50 55 60 5-Year Term Male $2.32 2.38 243 2.49 2.55 2.62 32.69 2.77 2.84 2.90 2.98 3.07 3.14 Sex and Age of Insured 3.43 4.23 6.12 9.72 16.25 24.10 Term Insurance Female $ 1.90 1.96 2.07 2.15 2.22 2.30 2.37 2.45 2.51 2.58 male-50 2.64 2.70 2.78 2.92 3.90 5.18 8.73 12.82 19.43 10-Year Term 4.57 4.64 4.70 4.79 4.85 Male Female $4.33 $4.01 4.42 4.12 4.49 4.20 4.92 5.11 5.18 5.23 5.30 Type of Policy 6.42 7.14 8.81 14.19 22.03 37.70 20-payment life 4.29 4.36 4.42 4.47 4.51 4.60 4.69 4.77 4.84 4.93 5.35 6.24 7.40 9.11 13.17 24.82 Whole Life Male Female $11.17 $13.22 13.60 11.68 14.12 12.09 14.53 14.97 15.39 15.90 16.38 16.91 17.27 17.76 18.12 18.54 24.19 27.21 33.02 37.94…

You have a choice of investing in a financial instrument that either compounds interest on an annual basis or on a quarterly basis.  Which would you choose? Group of answer choices I would prefer simple interest Quarterly compounding I would be indifferent; I would earn the same with either compounding. Annual compounding

Buy On Time or Pay Cash Cost of Borrowing 1. 2. 3. 4. 5. 6. 7. 8. Cost of Paying Cash 9. 10. Terms of the loan a. Amount of the loan b. Length of the loan (in years) c. Monthly payment Total loan payments made ($ per month Less: Principal amount of the loan Total interest paid over life of loan Tax considerations: - Is this a home equity loan? - Do you itemize deductions on your federal tax return? What federal tax bracket are you in? Taxes saved due to interest deductions ($ %) Total after-tax interest cost on the loan X months) Annual interest earned on savings (6% X Annual after-tax interest earnings ($ %) X $10,000.00 5 $188.70 no yes 35% $ $ $ 00 00 $