Richard is using the capital retention approach to


Richard is using the capital retention approach to determine how much life insurance to purchase. Richard would like to provide $45,000 per year to his family, forever, if he dies. The assets that he has today will provide $35,000 in annual income without the liquidation of these assets. If life insurance proceeds can be invested to earn a 5 percent annual return, how much life insurance should Richard purchase to fund the additional income needed to meet the $45,000 annual income goal?

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Financial Management: Richard is using the capital retention approach to
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