EBK FOCUS ON PERSONAL FINANCE
6th Edition
ISBN: 9781260140965
Author: Kapoor
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 10, Problem 2P
Summary Introduction
To determine: Total insurance needed by using DINK method.
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Sharon and Brian are in good health and have reasonably secure careers. Each earns $45,000 annually. They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 in student loans. If one should die, they think that funeral expenses would be $12,000. What is their total insurance need using the DINK method?
Rudabeh, 34, and Donovan, 31, want to buy their first home. Their current combined net income is
$69 comma 00069,000
and they have two auto loans totaling
$29 comma 00029,000.
They have saved approximately
$14 comma 00014,000
for the purchase of their home and have total assets worth
$ 55 comma 000$55,000,
which are mostly savings for retirement. Donovan has always been cautious about spending large amounts of money, but Rudabeh really likes the idea of owning their own home although she hasn't expressed her preference to Donovan. They do not have a budget, but they do keep track of their expenses, which amounted to
$ 57 comma 000$57,000
last year, including taxes. They pay off all credit card bills on a monthly basis and do not have any other debt or loans outstanding. Other than that, they do not spend a great deal of time tracking their finances.
a. What financial statements should Rudabeh and Donovan prepare to begin realizing their home purchase goal? What records…
Nancy is a widow with two teenage children. Nancy's gross income is 54200 per month, and taxes take about 22% of her income. Using the income method, Nancy calculates she will need to purchase about eight times her disposable income in life insurance to meet her needs. How much insurance should Nancy purchase?
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