Sharon is trying to determine how much life insurance to purchase.

Sharon would like to provide $60,000 per year (pretax) to her family, indefinitely, when she dies. Her assets consist of: $150,000 in long-term CDs that yield 4% annually, preferred stock that provides $16,000 per year in dividends, and rental property that produces pre-tax income of $24,000 annually. she would like to use the interest income from invested life insurance proceeds to fund the remaining annual income desired. Assuming life insurance proceeds can be invested to yield a 3.25% annual return, how much additional life insurance should Sharon purchase according to the capital retention approach?

Sharon is also considering the needs approach. She was surprised to learn that Social Security survivor benefits would be payable upon her death. According to a recent benefit estimate from Social Security, Sharon's family would receive $1,689 percent compounded monthly (.75% monthly), what is the present value of this income stream from social security? Assuming the first payment would be received one month from today.