Betty Purchased an Annuity for $24,000 in 2016

question 112

Multiple Choice

Betty purchased an annuity for $24,000 in 2016.Under the contract,Betty will receive $300 each month for the rest of her life.According to the actuarial estimates,Betty will live to receive 96 payments and will receive a 3% return on her original investment.

• A)If Betty collects $3,000 in 2016,her gross income is $630 (.03 × $21,000).
• B)Betty has no gross income until she has collected $24,000.
• C)If Betty lives to collect more than 96 payments,all of the amounts collected after the 96th payment must be included in taxable income.
• D)If Betty lives to collect only 60 payments before her death,she will report a $6,000 loss from the annuity [$24,000 - (60 × $300)= $6,000] on her final return.
• E)None of these.

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Definitions:

Oligopoly

A market structure characterized by a small number of firms dominating the market, where each has significant control over prices and supply.

Product Differentiation

The process of distinguishing a product or service from others in the market to make it more attractive to a particular target market.

Oligopoly Market

A market structure characterized by a small number of firms controlling a large majority of the market share, leading to limited competition.

Output

The total amount of goods and services produced by an economy or a production process, serving as a key indicator of economic health.