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A 60-year-old grandmother wants a life insurance policy that could replace her annual $55,000 earnings for...

A 60-year-old grandmother wants a life insurance policy that could replace her annual $55,000 earnings for the next 10 years. If the long-term interest rate is now 6.2%, how large of a life insurance policy does she need?

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Answer #1

Amount of policy = Amount * PVA6.2%,10

                   = 55000 * 7.29085

                   = $ 400996.75 (rounded to 400997)

**

find present value annuity factor using present value annuity table at 6.2 % for 10 periods .or using financial calculator where i= 6.2%,n=10 ,PMT =55000 and then press PV=?

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