Nancy and Leonard are married. They have two children who will be financially dependent for the next 20 years. They are taking out life insurance on Leonard, the bread winner and earns an annual salary of $80,000
Nancy is sure she is able to get a 9.5% rate of return on the policy settlement. Using the earnings multiple approach calculate how much life insurance they should take out on Leonard.
A) $1,038,225
B) $1,704,952
C) $549,893
D) $301,471
E) None of the above
Answer: C
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