In 2001, Alejandro Buys an Annuity for $100,000 That Will

question 69

Multiple Choice

In 2001, Alejandro buys an annuity for $100,000 that will pay Alejandro an annual amount for life with survivor benefits to his wife. When Alejandro dies in the current year, a comparable contract would have cost $81,000. What amount is included in Alejandro's gross estate?

• A)$0
• B)$81,000
• C)$100,000
• D)$181,000

---

Definitions:

Negative Externality

A cost that is suffered by a third party due to an economic transaction or activity.

Production

The act of merging diverse physical and non-physical inputs (including blueprints and skills) to produce goods for consumption.

Gasoline

A liquid fuel derived from petroleum, primarily used to power internal combustion engines in vehicles.

Private Value

The valuation of a good or service to an individual or entity, reflecting personal utility rather than market or societal value.