Alice and Tommy have 3 dependent children. Alice earns $125,000 per year. They are taking out insurance on Alice for the next 30 years. Tommy expects to get a 9.25% rate of return on the life insurance payoff
Using the earnings multiple approach calculate how much life insurance they need to take out on Alice.
A) $987,440
B) $1,005,011
C) $1,105,447
D) $2,228,553
E) None of the above
Answer: B
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