Question

If an annuitant owns 300 annuity units and receives $1,500 a month, what is the value of each annuity unit?

a) $5
b) $10
c) $20
d) $25

Answer 1

The value of each annuity unit is $5, which is found by dividing the total monthly payment of $1,500 by the number of units, which is 300. The correct option is A.

Step-by-step explanation:

If an annuitant owns 300 annuity units and receives $1,500 a month, the value of each annuity unit can be calculated by dividing the total monthly payment by the number of units. We use the formula:

Total Monthly Payment / Number of Annuity Units = Value of Each Annuity Unit

Inserting the given numbers into the formula:

$1,500 / 300 units = $5 per unit

Therefore, the value of each annuity unit is $5.