Ronald McDuffie purchases a new car at a cost of $14,400. He pays $3,000 down and issues an installment note payable by which he promises to pay the balance in 18 equal monthly installments, which include interest at an annual rate of 18% on the remaining unpaid balance at the beginning of each month, starting with the first month after the purchase.

Required

1. Compute the equal installment payments.

2. Compute the interest that will be paid for each of the first two periods. Indicate the amount of each payment that will be a reduction of principal.