Just before his first attempt at bungee jumping, John decides to buy a life insurance policy. His annual income at age 30 is$36,000, so he figures he should get enough insurance to provide his wife and new baby with that amount each year for the next 35 years. If the long-term interest rate is6.9%, what is the present value of John’s future annual earnings? (Round your answer to the nearest cent.)
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Rounding up to the next $50,000, how much life insurance should he buy? (Round your original answer to the nearest $50,000.)
Present Value ===== (36000 / 6.9%) (1 – (1+6.9%)^(-35))(521739.13) (1-(1.069)^(-35))(521739.13) (1-0.096779)(521739.13) (0.903221)471,245.74 Present value of John’s future earnings are…
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