(6 marks): Mr. Senior, age 70 has a life expectancy of 15 years. He owns a house worth 500,000; he is mortgage free. He is contemplating three options to supplement his monthly income: (1) a reverse annuity mortgage (RAM). He converts 30% home equity into a life annuity, which pays him monthly income over 15 years with interest rate j2=5%; (2) life estate. The cost of life estate estimated by an interested investor is 300,000. The lump-sum cash to be received is house value minus 300,000. He plans to use the cash to buy a life annuity with the same conditions as in (1). (3) sale leaseback. He plans to use the sales price to buy a life annuity with the same conditions as in (1). However, in this case, he has to pay a rent of 2,500 per month. His monthly income would be monthly cash paid from annuity minus rent.

What is the monthly income in each option?