Answer
We want to calculate periodic payment such that present value of all future payment made is equal to the amount borrowed.
Thus formula for A = P(A/P,i,n) we have to calculate annual amount and thus n = number of years = 5, i = interest rate = 12%.
Thus A = P(A/P,12%,5). here P = 30,000 and using compound interest table, P(A/P,12%,5) = 0.2774
=> A = 30,000*0.2774 = 8322
Hence, the correct answer is (a) A = P(A/P,12%,5) = $30,000(0.2774) = $8322
{Another way :
Note :
P = (A/i)(1 - 1/(1 + i)n) where P = 30,000, n = 5, i = 12% = 0.12 and using this you can calculate A}
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