Determine the tax-free amount of the monthly payment in each of the following instances. Use the life expectancy tables. Use Table Table III and Table V. Required: a. Person A is age 59 and purchased an annuity for $84,000. The annuity pays $800 per month for life. Note: Round exclusion percentage computation to one decimal place. b. Person B is 68 and purchased an annuity for $82,000. The annuity pays $1,050 per month for life. Note: Round exclusion percentage computation to one decimal place. Round your final answer to 2 decimal places. c. Person C is 61 and purchased an annuity for $42,000 that pays a monthly payment of $650 for 10 years. Note: Round exclusion percentage computation to one decimal place. Round your final answer to 2 decimal places. a. Tax free portion of payments b. Tax free portion of payments c. Tax free portion of payments Amount
Determine the tax-free amount of the monthly payment in each of the following instances. Use the life expectancy tables. Use Table Table III and Table V. Required: a. Person A is age 59 and purchased an annuity for $84,000. The annuity pays $800 per month for life. Note: Round exclusion percentage computation to one decimal place. b. Person B is 68 and purchased an annuity for $82,000. The annuity pays $1,050 per month for life. Note: Round exclusion percentage computation to one decimal place. Round your final answer to 2 decimal places. c. Person C is 61 and purchased an annuity for $42,000 that pays a monthly payment of $650 for 10 years. Note: Round exclusion percentage computation to one decimal place. Round your final answer to 2 decimal places. a. Tax free portion of payments b. Tax free portion of payments c. Tax free portion of payments Amount
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Determine the tax-free amount of the monthly payment in each of the following instances. Use the life expectancy tables. Use Table
Table III and Table V.
Required:
a. Person A is age 59 and purchased an annuity for $84,000. The annuity pays $800 per month for life.
Note: Round exclusion percentage computation to one decimal place.
b. Person B is 68 and purchased an annuity for $82,000. The annuity pays $1,050 per month for life.
Note: Round exclusion percentage computation to one decimal place. Round your final answer to 2 decimal places.
c. Person C is 61 and purchased an annuity for $42,000 that pays a monthly payment of $650 for 10 years.
Note: Round exclusion percentage computation to one decimal place. Round your final answer to 2 decimal places.
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a. Tax free portion of payments
b. Tax free portion of payments
c. Tax free portion of payments
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Transcribed Image Text:Age
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
(Single Life Expectancy)
(For Use by Beneficiaries)
Age
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
Life Expectancy
27.1
26.2
25.4
24.5
23.7
22.9
22.0
21.2
20.4
19.6
18.8
18.0
17.2
16.4
15.6
14.8
14.1
13.3
12.6
11.9
11.2
10.5
9.9
9.3
8.7
8.1
7.6
7.1
6.6
6.1
5.7
109
110
111
112
113
114
115
116
117
118
119
120+
Life Expectancy
5.3
4.9
4.6
4.3
4.0
3.7
3.4
3.2
3.0
2.8
2.6
2.5
2.3
2.2
2.1
2.1
2.1
2.0
2.0
2.0
2.0
2.0
1.9
1.9
1.8
1.8
1.6
1.4
1.1
1.0
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