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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
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Chapter 19 Solutions
Contemporary Mathematics for Business and Consumers
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