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Fireburntbudder
03.03.2020 •
Business
Marty and Mary have jobs and contribute to the household expenses according to their income. Marty contributes 75% of the expenses and Mary contributes 25%. Currently, their household expenses are $ 30,000 annually. Marty and Mary have three children. The youngest child is 12, so they would like to ensure that they could maintain their current standard of living for at least the next eight years. They feel that the insurance proceeds could be invested at 6%. In addition to covering the annual expenses, they would like to make sure that each of their children has $25,000 available for college. If Marty were to die, Mary would go back to school part-time to upgrade her training as a nurse. This would cost $20,000. They have a mortgage on their home with a balance of$55,000.
How much life insurance should they purchase for Marty?
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Ответ:
Answer explained
Explanation:
Firstly, we write down data & figures provided in question.
Annual household expense - $ 30,000
Marty contribution to household expenses is 75% amounting $ 22,500
Mary contribution to household expenses is 25% amounting $ 7,500
Rate of Interest on Investment - 6% per annum
Now question is how much life insurance should they purchase for marty so they can maintain current living standard and discharge other obligation in case of Marty's death.
Therefore, Insurance amount = Amount require to invest at 6% interest to provide annual interest income equals to marty's annual contribution to household expense + $ 75,000 (3x25,000) for college + $ 20,000 for nurse training + $ 55,000 for mortgage
Amount require to invest at 6% interest to provide annual interest income equals to marty's annual contribution to household expense = $ 22,500/0.06 = $ 375,000
Insurance Amount = 375,000 + 75,000 + 20,000 + 55,000 = $ 525,000
Ответ:
b. investors use the accounting information for planning, controlling and organizing the business
Explanation:
Investors are individuals or firms that commit their money to a business as capital with profits expectations. Investors are usually not part of business management. Their main contribution is the money they provide to finance the business operations. Investors, therefore, do not manage, plan, control, or organize the business.
Investors are also users of accounting information. They are classified as external users. To investors, accounting information communicates how the management is using their funds and the expected business performance in terms of profitability and growth.