Anne purchased an annuity from an insurance company that promised to pay her $11,000 per year for the next ten years. Anne paid $87,450 for the annuity, and in exchange she will receive $110,000 over the term of the annuity.

1) How much of the first $11,000 payment should Anne include in gross income? (Do not round intermediate calculations.)

2) How much income will Anne recognize over the term of the annuity?