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Tanya earns $65,000 per year and believes that she can earn 6% on her investment assets....

Tanya earns $65,000 per year and believes that she can earn 6% on her investment assets. If she uses an 80% replacement ratio how much life insurance does Tanya need using the capital retention approach?

A: $981,776

B: $918,667

C: $866,667

D: $986,676

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Answer #1

Amont need annually= current income* retention ratio

= 65000*80%

= 52000$

Amount of life insurance needed

= annual requirements/Interest rate

= 52000/0.06

= 866,667$

I hope my efforts will be fruitful to you.....?

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