Question & Answer: Anne purchased an annuity from an insurance company that promised to pay her $14,000 per year for the next ten years. Anne paid $109,200 for the annuity, and…..

Anne purchased an annuity from an insurance company that promised to pay her $14,000 per year for the next ten years. Anne paid $109,200 for the annuity, and in exchange she will receive $140,000 over the term of the annuity.

a. How much of the first $14,000 payment should Anne include in gross income? (Do not round intermediate calculations.)

b. How much income will Anne recognize over the term of the annuity?