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Alex Cross has purchased an annuity for $70,000 and is to receive $600 per month for life. He is 65 years old and has a

Alex Cross has purchased an annuity for $70,000 and is to receive $600 per month for life. He is 65 years old and has a life expectancy of 14 years.

a. Apply the exclusion ratio formula to determine how much of his annual annuity income is TAXABLE. Your answer should be in dollars.

b. If Cross is still alive and collecting annuity payments at age 81, what percentage of his income is TAXABLE?

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