Penny, Age 45, Purchased an Annuity Contract That Cost $45,000

Multiple Choice

Penny, age 45, purchased an annuity contract that cost $45,000. The contract will pay Penny $600 per month for 10 years after she reaches age 62. During the current year, Penny turns 62 and receives 4 payments under the contract. Penny's taxable income from the annuity payments is:

A) $900
B) $1,500
C) $1,708
D) $2,250
E) $2,400