Suppose That You Earn $50,000 Annually

question 8

Multiple Choice

Suppose that you earn $50,000 annually.You expect expenses to drop by 22% for your family in the event of your death.Currently,if you die,you want to provide for your family for at least 15 more years,and the applicable after-tax and inflation return assumed is 5%.Using the earnings multiple approach provided in your textbook,what would be the amount of life insurance that you should purchase?

• A)$301,080
• B)$404,820
• C)$485,940
• D)$500,000
• E)$519,000

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Definitions:

Numbers

Abstract entities that represent quantities, positions, or values in mathematics, enabling the measuring, labeling, and ordering of objects and ideas.

Trees and Tables

An analogy often used to explain philosophical concepts, contrasting natural objects like trees with man-made objects like tables to explore ideas about reality and perception.

Myth of the Cave

An allegory presented by Plato, depicting a group of people who have lived chained to the wall of a cave all of their lives, facing a blank wall, unable to see the reality behind them.

Physical Things

Physical Things refer to objects or entities that exist in the material world and can be perceived by the senses.