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Family Need Method Johana and her spouse are in good health and have reasonably secure careers. She makes about $65,000 annually and has opted for life insurance coverage of three times her salary through her employer. One of her most important financial goals involves building an education fund of $80,000 to cover the cost of a four-year university program for her two children ages 2 and 4. To date, she has accumulated $15,000 toward this goal in an RESP. Johana owns a home with a $280,000 remaining mortgage balance. Other debts include a $10,000 car loan, $5,000 student loan, and $3,000 charged to credit cards. In the event of her death, Johana wishes to leave her

          Family Need Method
Johana and her spouse are in good health and have reasonably secure careers. She makes about $65,000 annually and has opted for life insurance coverage of three times her salary through her employer. One of her most important financial goals involves building an education fund of $80,000 to cover the cost of a four-year university program for her two children ages 2 and 4. To date, she has accumulated $15,000 toward this goal in an RESP. Johana owns a home with a $280,000 remaining mortgage balance. Other debts include a $10,000 car loan, $5,000 student loan, and $3,000 charged to credit cards. In the event of her death, Johana wishes to leave her
        
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Horngren’s Cost Accounting
Horngren’s Cost Accounting
Srikant M. Datar, Madhav V. Rajan 16th Edition
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Family Need Method Johana and her spouse are in good health and have reasonably secure careers. She makes about $65,000 annually and has opted for life insurance coverage of three times her salary through her employer. One of her most important financial goals involves building an education fund of $80,000 to cover the cost of a four-year university program for her two children ages 2 and 4. To date, she has accumulated $15,000 toward this goal in an RESP. Johana owns a home with a $280,000 remaining mortgage balance. Other debts include a $10,000 car loan, $5,000 student loan, and $3,000 charged to credit cards. In the event of her death, Johana wishes to leave her
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Transcript

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00:01 We need to evaluate the life insurance needed for each spouse.
00:05 So, life insurance needed for spouse a which is evaluated using the expense approach.
00:26 So, firstly we'll evaluate annual expense which is evaluated as expenses 50 ,000 for spouse b which we add income $12 ,000 wherein we get $62 ,000.
00:54 Then life insurance needed is evaluated as annual expense for spouse a which is $62 ,000 wherein we multiply it by 1 to which we subtract 1 wherein we add r which is 0 .03 to the power negative 25 wherein we divide it by 0 .03.
01:32 So, equating it we get the value to be approximately $12 ,16 ,938 .34.
01:43 Then life insurance needed for spouse b...
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