Sarah, age 29, makes $45,000 a year and wants to buy a 15-year term policy that would replace seven years of her salary. The annual premium rate (per $1000 of face value) for her age group is $1.46. What is Sarah’s premium, to the nearest dollar?
a.
$460
b.
$215
c.
$66
d.
$986
Sarah's salary for seven years is $45,000 * 7 = $<<45000*7=315000>>315,000.
The face value of Sarah's policy is $315,000 / 1000 = <<315000/1000=315>>315.
So, her premium will be $315 * 1.46 = $<<315*1.46=459.9>>459.9.
Rounding this to the nearest dollar gives a premium of $<<460=460>>460.
Therefore, Sarah’s premium is answer choice a. $460. Answer: \boxed{a}.
To calculate Sarah's premium, we need to determine the face value of her policy first.
Since Sarah wants to replace seven years of her salary, we can calculate the face value of her policy as:
Face value = 7 years * $45,000 per year
Face value = $315,000
Next, we can calculate the premium by multiplying the face value by the premium rate per $1000:
Premium = (Face value / $1000) * premium rate
Premium = ($315,000 / $1000) * $1.46
Now, let's calculate the premium:
Premium = ($315,000 / $1000) * $1.46
Premium = $315 * $1.46
Calculating the value:
Premium = $459.90
Rounding this to the nearest dollar, the premium for Sarah's policy is: $460
So, the correct option is:
a. $460