financial investment homework

Hi,
My name is Franklin. I have a question on financial investment.
Sue and Tom Wright are assistant professors at the local university. They each take home about $40,000 per year after taxes. Sue is 37 years of age, and Tom is 35. Their two children, Mike and Karen, are 13 and 11.
Were either one to die, they estimate that the remaining family members would need about 75% of the present combined take-home pay to retain their current standard of living while the children are still dependent. This does not include an extra $50/month in child-care expenses that would be required in a single-parent household. They estimate that survivors benefits would total about $1,000 per month in child support.
Both Tom and Sue are knowledgeable investors. In the past,average after-tax returns on their investment portfolio have exceeded the rate of inflation by about 3%.
1. If Sue Wright was to die today, how much would the Wrights need in the family maintenance fund? Use the "needs approach" and explain the reasons behind your calculations.
2. Suppose the Wrights found that both Tom and Sue had a life insurance protedtion gap of $50,0000, Present the steps in sequence how Wrights should proceed to search for protection to close that gap?

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  1. If you read the book you will understand that gap insurance is only the needed added protection, so how would you recommend them to gap that 50K?

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  2. Im stuck on this same question. I totally understand about the first part but the 2nd part and the gap insurance is just way over my head. Is this asking how they could match the 50k coverage or is it saying that in the event that Tom has an outstanding loan with bank X for 100,000 and the gap insurance will cover only 50k of that how would the family cover the remaining 50k? This is such a good course to take but wow is this stuff confusing.

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    posted by corry w
  3. ftsnadwzj bqvhoajc qxrylajgs dhjxifw bzpixmwgk mqyl ycduajnv

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