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John Wilson is a 42-year-old computer programmer, husband, and father of four. He wants to use the capital retention approach to determine how much life insurance he should purchase. Because of his $105,000 salary and their four children, his wife does not work outside the home. The family's current annual living expenses are approximately $75,000, including $8,000 in annual IRA contributions. He prefers to use the capital retention approach (CRA) so that he can be reasonably assured that his family will not exhaust the proceeds of his policy. However, he also wants to consider the possible reduction in expenses and apply a 70% replacement ratio to the calculation.a. Calculate John's insurance need using the capital retention approach, an after-tax discount rate of 5.5%, and assume end-of period payment of benefits.b. Calculate John's insurance need using the human life value approach (HLV), an after-tax discount rate of 5.5%, a remaining working life of 25 years, and assume end-of period payment of benefits. After your presentation, John was bewildered about why the HLV and CRA calculations resulted in significantly different insurance needs. Using the two formulas as a guide, explain to John why this result occurred.
In the year of 1985, a given Japanese imported automobile sold for 1,476,000 yen, or $8,200. If the car still sold for same amount of yen today but the current exchange rate is 144 yen per dollar
Tulley Appliances, projects next year's sales to be $20 million. Current sales are at $15 million based on current assets of $5 million and fixed assets of $5 million.
Determine which method of financing has traditionally made up the majority of external financing by corporations?
Stocks x and Stock y have the following probabiltiy distributionsof expected future returns: Compute the expected rate of return and standard devaiation of expected returns
National Bank Asia desire to employee fresh young graduates to work in their Market Risk Management department. As you are preparing your interview,
A corporation decides to buy new equipment for $10,000 with an expected useful life of four years. At the end of each of the four years, the cash flow from this equipment is expected to be $4000.
The dividends of Charles Schwab Corporation are expected to grow indefinitely by 5 percent per year. If this year's year-end dividend is $8 and the company's required rate of return is 10 percent per year,
Can you please show me how to solve the following problems in M.S. excel? Please note that Present Value stands for present value.
Groupon is a popular group purchasing and daily deals website. In a recent advertisement, a local restaurant to sold buffet vouchers at a steep discount on its website.
How much can you spend for each year after you retire? Your first withdrawal will be made at the end of your first retirement year.
There're many reasons why a business may file for bankruptcy. Describe the reasons that would drive a business to file for bankruptcy.
Which of the following statements is NOT an objective of financial reporting? An increase in inventory balance would be reported in a statement of cash flows using the indirect method
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