Hector, age 40, would like to determine how much life insurance to purchase using the humanlife value approach. He plans to retire at 67 and assumes his average annual working eamingsis $80,000. Of the working earning, 60% will be consumed and 40% is available for the supportof his family Using interest rate of 4%, what is his human life value, round to nearest cents?

The human life value is very important in insurance so that proper insurance cover is taken so that…

life insurance to purchase us ue approach. He plans to retire at 67 and assumes his average annual we 000. Of the working earning, 60% will be consumed and 40% is available Family. Using interest råte of 4%, what is his human life value, round to nea

life insurance to purchase us ue approach. He plans to retire at 67 and assumes his average annual we 000. Of the working earning, 60% will be consumed and 40% is available Family. Using interest råte of 4%, what is his human life value, round to nea

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 39P

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

Hector, age 40, would like to determine how much life insurance to purchase using the human
life value approach. He plans to retire at 67 and assumes his average annual working eamings
is $80,000. Of the working earning, 60% will be consumed and 40% is available for the support
of his family Using interest rate of 4%, what is his human life value, round to nearest cents?

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