Ted loaned money to a business acquaintance. The loan was for $100,000 and was to be repaid at the rate of $13,000 each year for ten years. The effective interest rate was 5%. He also purchased an annuity contract for $100,000 that would pay him $13,000 each year for ten years. Will Ted's gross income for the first year differ with the loan as compared to the annuity contract? Explain your answer.

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The Answer of Ted loaned money to a business acquaintance. The loan was for $100,000 and was to be repaid at the rate of $13,000 each year for ten years. The effective interest rate was 5%. He also purchased an annuity contract for $100,000 that would pay him $13,000 each year for ten years. Will Ted's gross income for the first year differ with the loan as compared to the annuity contract? Explain your answer.

Ted Loaned Money to a Business Acquaintance