5.Here we have the PVA, the length of the annuity, and the interest rate. We want to calculate the annuity payment. Using the PVA equation:
PVA = C({1 – [1/(1 + r)t]} / r ))
PVA = $25,000 = $C{[1 – (1/1.079)12 ] / .079}
We can now solve this equation for the annuity payment. Doing so, we get:
C = $25,000 / 7.57528
C = $3,300.21