Penelope Purchased an Annuity Contract That Cost $45,000

Multiple Choice

Penelope purchased an annuity contract that cost $45,000. The contract will pay Penelope $600 per month for 10 years after she reaches the age of 62. During the current year, Penelope turns 62 and receives 4 payments under the contract. The amount Penelope may exclude from taxable income as a return of capital on this years payments is:

A) $692
B) $900
C) $1,500
D) $2,250
E) $2,400