Question

Alpha partnership has 8 partners who have entered into a binding buy/sell agreement that requires any surviving partners to purchase the partnership interest of any partner to die. The partnership uses an entity approach to fund this arrangement. How many policies are required to satisfy this arrangement? (a) 1. (b) 8. (c) 16. (d) 64.

Answer 1

total number of policies = 64

so correct option is (d) 64

Step-by-step explanation:

given data

partnership = 8 partners

to find out

How many policies are required

solution

we know that every partner required a policy for each and every other partner

so here we can say number of policies will be

number of policies = 8 × 7

number of policies = 56 Policies

and

here firm also hold a policy for each partner i.e here 8

so here total number of policies will be

total number of policies = 56 + 8

total number of policies = 64

so correct option is (d) 64