A regular payment made to purchase insurance coverage is known as?

$488.77

Explanation:

Present value (PV) of the amount a day to his 60th birth day = Target amount ÷ (1 + r)^n (1)

Where;

r = interest rate = 15% or 0.15

n = number of year = 1

Substituting the values into equation (1), we have:

PV of the amount a day to his 60th birth day =  $1,000,000 ÷ (1 + 0.15)^1 = $869,565.217391304.

To calculate the payment to make each year, we use the sinking fund formula as follows:

A = F * {r/[(1 + r)^n - 1]} (2)

Where;

A = Annual payment

F = PV of the amount a day to his 60th birth day = $869,565.217391304.

r = interest rate = 15% or 0.15

n = number of years = 40

Substituting the values into equation (2), we have:

A = $869,565.217391304 * {0.15/[(1 + 0.15)^40 - 1]} = $488.77

Therefore, the engineer must set aside $488.77 in this project each year.