The smiths want to buy life insurance for chris who earns, Ask an Expert

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The Smiths want to buy life insurance for Chris, who earns $115,000/year. They want an insurance amount sufficient, if invested in an annuity, to cover 100% of Chris's annual nominal income for 10 years and 75% of that annual nominal income for an additional 10 years. They anticipate a 5% yield rate on the annuity as well as on saved funds. Assume all payments occur at year end. How much insurance should they buy? [Hint: Compute more than one annuity value then figure out how to combine them. Chose the interval that contains your calculated answer.]

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