Richard purchased a life insurance policy at a cost of $65,000. His two sons, Dale and Drew, were named the beneficiaries. His policy promises a return of 7.5 percent per year if Richard dies after his normal life expectancy of 25 years. Due to a recent recession, Richard must cash out his policy after 15 years. How much cash will Richard receive after-taxes and what is his after-tax rate of return? Assume Richard's marginal tax rate is 30%.

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The Answer of Richard purchased a life insurance policy at a cost of $65,000. His two sons, Dale and Drew, were named the beneficiaries. His policy promises a return of 7.5 percent per year if Richard dies after his normal life expectancy of 25 years. Due to a recent recession, Richard must cash out his policy after 15 years. How much cash will Richard receive after-taxes and what is his after-tax rate of return? Assume Richard's marginal tax rate is 30%.

Richard Purchased a Life Insurance Policy at a Cost of $65,000