Question
Beverlyn Boo now needs advice on the total amount of protection required. She has provided you with the following information: Monthly expense: $1,000 Monthly pay:
Beverlyn Boo now needs advice on the total amount of protection required. She has provided you with the following information: Monthly expense: $1,000 Monthly pay: $2,300 (Expected wage growth = 5%) Current Assets: $10,000 cash Inflation: 3% Stock investment return: 6% Years of protection: 20
(a) Compute the amount of protection based on the Expense and Liabilities method. (10 marks)
(b) Calculate the amount of protection based on the Income Based method. (10 marks
(c) Assuming that Beverlyn invests her $10,000 in a stock that earns a return of 6%, compute the value of this investment in 20 years
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