Luke is 30 years old and earns an annual salary of $55,000. His wife wants to take out a life insurance policy on him until he turns 67
Using the earnings multiple approach, how large should the face value of his insurance policy be—assuming his wife can earn an annual rate of return of 8.5% on his life insurance pay off?
A) $223,985
B) $1,225,462
C) $430,803
D) $6,154,330
E) None of the above
Answer: C
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