Concept explainers
Alex Baron is evaluating his life insurance needs. His family's total living expenses are $39,800 per year. Carol, his wife, earns $23,000 per year in salary and receives an additional $4,000 per year in municipal bond interest. If the prevailing interest rate is currently 2.5%. how much life insurance should Alex purchase to cover his dependents’ income shortfall?
Total living expenses = $39,800
Total income = 23,000 + 4,000 = $27,000
Income shortfall = 39,800 – 27,000 = $12,800
Insurance needed
Want to see the full answer?
Check out a sample textbook solutionChapter 19 Solutions
Contemporary Mathematics for Business & Consumers
- Eduardo noticed that his new car loan papers stated that with a 7.5% simple interest rate, he would pay $6,596.25 in interest over five years. How much did he borrow to pay for his car?arrow_forwardKarl has two years to save $10000 to buy a used car when he graduates. To the nearest dollar, what would his monthly deposits need to be if he invests in an account offering a 4.2% annual interest rate that compounds monthly?arrow_forward