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

To find the value of each annuity unit, you can use the relationship between the total monthly payment, the number of annuity units, and the value of each unit. The formula is straightforward: divide the total amount received monthly by the total number of annuity units owned by the annuitant.

In this case, the annuitant receives $1,500 per month and owns 300 annuity units. Thus, by performing the calculation:

Value of each annuity unit = Total monthly payment / Number of annuity units

Value of each annuity unit = $1,500 / 300 = $5

This means each annuity unit is valued at $5. Therefore, the correct answer correctly reflects the proportional relationship between the total payment and the number of units held, confirming that the annuity units’ valuation is accurately represented.