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Richard, age 45, is married with two children in high school. He estimates that his average annual earnings over the

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Richard, age 45, is married with two children in high school. He estimates that his average annual earnings over the next 20 years will be $60,000. He estimates that one-third of his average annual earnings will be used to pay taxes, insurance premiums, and the costs of self-maintenance. The remainder will be used to support his family. Richard wants to calculate his human life value and believes a 6 percent discount rate is appropriate. The present value of $1 payable for 20 years at a discount rate of 6 percent is $11.47. Calculate Richard's human life value.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...

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Richard has average annual earnings of 60 000 One third of his ear…View the full answer


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Principles of Risk Management and Insurance

Principles of Risk Management and Insurance

ISBN: 978-0132992916

12th edition

Authors: George E. Rejda, Michael McNamara

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Question Posted: January 30, 2015 07:41:09
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