Four years ago A lent R12 000 to B. The loan was repayable by level annual instalments of capital over 12 years and interest was payable annually in arrear at 9% per annum. A retained part of each payment of capital and interest to provide himself with a level annual income and the balance of each payment was sufficient, when invested at 7% per annum, to replace his original capital at the end of the 12 years. Immediately after the fourth repayment, B wishes to change the repayment basis to level annual instalments of capital and interest. A will agree to this provided the amount of the level annual instalment of capital and interest payable by B under the revised arrangement is such that he is able to retain the same level of annual income and still replace his original capital by adding the balance of each payment to his existing investment at 7% per annum. (a) Calculate the level annual income retained by A