Please explain how to calculate.

F purchased an annuity policy at a total cost of $18,000. Starting on January 1, he began to receive an annual payment of $1, 500. His life expectancy as of that date was 16 years. The amount of annuity income to be included in his gross income for the year on his Federal income tax return is A. $375 B. $540 C. $1125 D. $1500