Question

Susan has purchased a whole life policy with a death benefit of $200,000. Assuming that she dies in 10 years and the average inflation has been 3 percent, what is the value of the purchasing power of the proceeds?

Answer 1

Answer:

Answer is: $148,809.52

Step-by-step explanation:

Susan has purchased a whole life policy with a death benefit of $200,000.

Assuming that she dies in 10 years.

Rate = 3% or 0.03

Future value after 10 years = $(1+r)^{n}$ = $(1.03)^{10}$ = 1.344

Purchasing power of proceeds = $\frac{200000}{1.344}$= $148,809.52