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- 51 > ... Heading 1 Paragraph Kl Styles 9. Teresa is the primary wage earner for her family. She earns $60,000 a year, before

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- 51 > ... Heading 1 Paragraph Kl Styles 9. Teresa is the primary wage earner for her family. She earns $60,000 a year, before taxes. It has been estimated that the family would require the replacement of 60% of Teresa's gross income, indefinitely, if she were to die prematurely. If long-term interest rates were expected to run at 5% and inflation was expected to run at 2.5%, how much insurance coverage would you recommend be placed on Teresa's life, based on a real rate of return on invested capital (assume that the insurance proceeds will be invested and not consumed)? (A) $720,000 (B) $1,440,000 (C) $2,400,000 (D) $1,200,000 annual

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