Using the Earnings Multiple Approach Calculate How Much Life Insurance

question 35

Multiple Choice

Using the earnings multiple approach calculate how much life insurance Heather and Robert need to take out on Heather.She earns $80,000 and is 37 years old.They want coverage until she retires at age 67.Robert is sure he can get an annual rate of return on the policy settlement of 8%.They have no children.

• A)$1,004,227
• B)$997,553
• C)$854,214
• D)$630,417
• E)None of the above

Recognize the advantages and disadvantages of different business forms.

Understand the significance of cash flows and accounting results in financial decision-making.

Grasp the tax implications of different corporate structures.

Understand the relationship between financial theory and economics.

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