Question

In: Economics

9. You and your spouse just adopted twin girls, little Heather and Beth. You want to...

9.

You and your spouse just adopted twin girls, little Heather and Beth. You want to make sure they

are taken care of for the next 22 years. (A)Based on the following information, how much life

insurance needs to be purchased for the husband, if any? (B) How much, if any, needs to be

purchased for the wife? Assume 3% inflation rate.

Market Labor Value

Husband: $72,000

Wife: $15,000

Household Production Value

Husband: $15,000

Wife: $40,000

Solutions

Expert Solution

Solution: -

(A). Husband total value= Market Labour value + Household Production value

Husband total value=72000+15000

                                   =87000

Life Insurance required=87000*Annuity Factor (3% for 22 years)

                                     =87000*15.937

                                     =$1386519

(B). Wife total value= Market Labour value + Household Production value

Wife total value=15000+40000

                            =55000

Life Insurance required=55000*Annuity Factor (3% for 22 years)

                                     =55000*15.937

                                     =$876535

Rahul Sunny answered 1 year ago
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