1 answer

Martin purchased an annuity in 2016 for $12,000 that immediately begins providing him $100 monthly payments...

Question:

Martin purchased an annuity in 2016 for $12,000 that immediately begins providing him $100 monthly payments for 14 years. So in 2018 how much income (rounded) does Martin need to recognize related to this annuity? 0 $ 0 because Ed has not fully recovered his initial investment yet $367 o $343 O $1.200 O None of the above
Martin purchased an annuity in 2016 for $12,000 that immediately begins providing him $100 monthly payments for 14 years. So in 2018 how much income (rounded) does Martin need to recognize related to this annuity? 0 $ 0 because Ed has not fully recovered his initial investment yet $367 o $343 O $1.200 O None of the above

Answers

Purchase of annuity

12000.00

Payment monthly received

100

No of years

14 years

No of period (for compounding) (14 years *12 month)

168

Compounding rate per month

0.4238833822%

Remark for above formula

RATE(168,100,-12000,0,0)

Years

Period

Beginning balance of annuity

Cash receipt

Interest revenue (beginning balance of annuity * 0.4238833822%)

Cash receipt towards principal of annuity (cash receipt - interest revenue)

Ending balance of annuity (beginning balance of annuity - Cash receipt towards principal of annuity)

2016

1

12000.00000

100.00000

50.86601

49.13399

11950.86601

2

11950.86601

100.00000

50.65774

49.34226

11901.52374

3

11901.52374

100.00000

50.44858

49.55142

11851.97232

4

11851.97232

100.00000

50.23854

49.76146

11802.21086

5

11802.21086

100.00000

50.02761

49.97239

11752.23847

6

11752.23847

100.00000

49.81579

50.18421

11702.05426

7

11702.05426

100.00000

49.60306

50.39694

11651.65732

8

11651.65732

100.00000

49.38944

50.61056

11601.04676

9

11601.04676

100.00000

49.17491

50.82509

11550.22167

10

11550.22167

100.00000

48.95947

51.04053

11499.18114

11

11499.18114

100.00000

48.74312

51.25688

11447.92426

12

11447.92426

100.00000

48.52585

51.47415

11396.45011

2017

13

11396.45011

100.00000

48.30766

51.69234

11344.75777

14

11344.75777

100.00000

48.08854

51.91146

11292.84631

15

11292.84631

100.00000

47.86850

52.13150

11240.71481

16

11240.71481

100.00000

47.64752

52.35248

11188.36233

17

11188.36233

100.00000

47.42561

52.57439

11135.78794

18

11135.78794

100.00000

47.20275

52.79725

11082.99069

19

11082.99069

100.00000

46.97896

53.02104

11029.96965

20

11029.96965

100.00000

46.75421

53.24579

10976.72386

21

10976.72386

100.00000

46.52851

53.47149

10923.25237

22

10923.25237

100.00000

46.30185

53.69815

10869.55422

23

10869.55422

100.00000

46.07423

53.92577

10815.62845

24

10815.62845

100.00000

45.84565

54.15435

10761.47410

2018

25

10761.47410

100.00000

45.61610

54.38390

10707.09020

26

10707.09020

100.00000

45.38558

54.61442

10652.47578

27

10652.47578

100.00000

45.15407

54.84593

10597.62985

28

10597.62985

100.00000

44.92159

55.07841

10542.55145

29

10542.55145

100.00000

44.68812

55.31188

10487.23957

30

10487.23957

100.00000

44.45367

55.54633

10431.69324

31

10431.69324

100.00000

44.21821

55.78179

10375.91145

32

10375.91145

100.00000

43.98176

56.01824

10319.89321

33

10319.89321

100.00000

43.74431

56.25569

10263.63753

34

10263.63753

100.00000

43.50585

56.49415

10207.14338

35

10207.14338

100.00000

43.26638

56.73362

10150.40977

36

10150.40977

100.00000

43.02590

56.97410

10093.43567

It is considered annuity purchase on beginning of year 2016.

Year

Period

Interest revenue

2018

25

45.61610

26

45.38558

27

45.15407

28

44.92159

29

44.68812

30

44.45367

31

44.21821

32

43.98176

33

43.74431

34

43.50585

35

43.26638

36

43.02590

Total revenue recognized in year 2018

$     531.96

Correct answer is None of above.

.

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