Mary, who is married and the mother of three, is 35 years and expects to work until 75. She earns $55,000 per year. Mary expects inflation to be 3% over her working life, and the appropriate risk-free discount rate is 5%. Her personal consumption is equal to 27% of her after-tax earnings, and her combined federal and state marginal tax bracket is 15%. 1) What is the amount of life insurance necessary for Mary using the Human Life Value method?
Mary, who is married and the mother of three, is 35 years and expects to work until 75. She earns $55,000 per year. Mary expects inflation to be 3% over her working life, and the appropriate risk-free discount rate is 5%. Her personal consumption is equal to 27% of her after-tax earnings, and her combined federal and state marginal tax bracket is 15%. 1) What is the amount of life insurance necessary for Mary using the Human Life Value method?
Chapter1: Federal Income Taxation—an Overview
Section: Chapter Questions
Problem 44P
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Mary, who is married and the mother of three, is 35 years and expects to work until 75. She earns $55,000 per year. Mary expects inflation to be 3% over her working life, and the appropriate risk-free discount rate is 5%. Her personal consumption is equal to 27% of her after-tax earnings, and her combined federal and state marginal tax bracket is 15%.
1) What is the amount of life insurance necessary for Mary using the Human Life Value method?
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