1. I have three children; ages 2, 4 and 6. I earn $85,000 per year. My wife work

Question

1. I have three children; ages 2, 4 and 6. I earn $85,000 per year. My wife works from home and earns an additional $50,000. If either me or my wife should pass away my family would be in financial distress. Owning which of the following products can be purchased to increase the chances that the family remains solvent should one wage earner die?

a. Life Insurance

b. Life insurance and annuities

c. shares of Ibm

d. Annuities and shares of ibm

e. Annuities

2. I have a credit card issued by Metro Bank. The card charges 29% interest APR. Interest is compounded daily. I use the card to pay for my text books. The cost of the books is $600. After 12 months what would be my credit card debt if I have not made any payments of interest or principal. Work with a 365 day year.

a. 651

b. 950

c. 629

d. 801

3. You are given the followjng data

FV $0, rate 10%, nper 50, payment $1,000, payments are made at the end of the year.

What is the maximum you would pay for this annuity. Do not consier taxes or risk. Only use the information I have given and use Excel to solve the problem.

a. 9914.81

b. 50000

c. 8414.21

d. 9500

4. Three of the tax advantages of sponsoring a 401(k) plan are:

Explanation / Answer

1)a. Life Insurance

2.)b. 950

3.)a. 9914.81

4.)a.True

5.)d. not enough information

6.)a. true

7.) c. 2.5 million

8.)b. False

9.) b. 1210

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