Oscar purchases an annuity in 2000 for $450,000 which will pay him $90,000 a year for life starting at age 65. His life expectancy at age 65 is 20 years. He receives $90,000 during 2021 which is the year in which he turns 68. He will report as income for 2021 of: 90,000 77,500 22,500 zero none of the above
Oscar purchases an annuity in 2000 for $450,000 which will pay him $90,000 a year for life starting at age 65. His life expectancy at age 65 is 20 years. He receives $90,000 during 2021 which is the year in which he turns 68. He will report as income for 2021 of: 90,000 77,500 22,500 zero none of the above
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Oscar purchases an annuity in 2000 for $450,000 which will pay him $90,000 a year for life starting at age 65. His life expectancy at age 65 is 20 years. He receives $90,000 during 2021 which is the year in which he turns 68. He will report as income for 2021 of:
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90,000
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77,500
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22,500
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zero
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none of the above
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Expert Solution
Step 1
An annuity scheme is just like a retirement scheme in which a person will receive a regular payments after a certain age is attained by a person as per specified in the annuity terms and conditions.
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