Damian is age 77.He purchased a single life annuity contract that will pay him $6,000 per month for life.The expected return on the contract is:

Question

Quizplus · Accepted Answer

The expected return on the contract is calculated by multiplying the monthly payment by 12 months to get the annual payment, and then multiplying that by the expected number of years the annuity will be paid. Assuming Damian lives to the average life expectancy for a 77-year-old (which is not specified in the question, so we'll use the payment information provided), the calculation would be $6,000 * 12 = $72,000 per year. Without knowing Damian's life expectancy, we can't calculate the exact expected return over his lifetime. However, choice B ($806,400) suggests an expectancy of slightly over 11 years of payments, which seems a reasonable estimate for life expectancy at age 77, making it the closest choice given the information provided.

Damian Is Age 77