Joanna Henderson is a single parent with two children and earns $58,400 a year. Her employer's group life insurance policy would pay 2.5 times her salary. She also has $77,867 saved in a 401k plan, $6,489 in a mutual funds, and a $3,893 certificate of deposit. She wants to purchase term life insurance for 15 years, until her youngest child is self-supporting. She is not concerned about her outstanding mortgage, as the children would live with her sister in the event of Joanna's death. Assuming she can receive a 2% after-tax, after-inflation return on insurance proceeds, use the earnings multiple method to calculate her insurance needed. How much more insurance does Joanna need to buy? What other information would you need to know to use the needs approach to calculate Joanna's insurance coverage?

n 3 4 5 6 TE 7 8 1% 0.990 1.970 2.941 3.902 4.853 5.795 6.728 7.652 8.566 9.471 10.368 11.255 12.134 13.004 13.865 2% 0.980 1.942 2.884 3.808 4.713 5.601 6.472 7.325 8.162 8.983 9.787 10.575 11.348 12.106 12.849 Present Value of an Annuity of $1 (PVIFA) 3% 4% 5% 6% 7% 0.971 0.962 0.952 0.943 0.935 1.913 1.886 1.859 1.833 1.808 2.829 2.775 2.723 2.673 2.624 3.717 3.630 3.546 3.465 3.387 4.580 4.452 4.329 4.212 4.100 5.417 5.242 5.076 4.917 4.767 6.230 6.002 5.786 5.582 5.389 7.020 6.733 6.463) 6.210 5.971 7.786 7.435 7.108 6.802 6.515 8.530 8.111 7.722 7.360 7.024 9.253 8.760 8.306 7.887 7.499 9.954 9.385 8.863 8.384 7.943 10.635 9.986 9.394 8.853 8.358 11.296 10.563 9.899 9.295 8.745 11.938 11.118 10.380 9.712 9.108 8% 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 9% 0.917 1.759 2.531 3.240 3.890 4.486 5.033 5.535 5.995 6.418 6.805 7.161 7.487 7.786 8.061 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 6.495 6.814 7.103 7.367 7.606 9 10 11 12. 13 14 15