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

Answer 1

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.