On January 1, 2011, you bought a new Toyota automobile for \(\$ 30,000\). You made a \(\$ 5,000\) cash down payment and signed a \(\$ 25,000\) note, payable in four equal instalments on each December 31 , the first payment to be made on December 31, 2011. The interest rate is 8 percent per year on the unpaid balance. Each payment will include payment on principal plus the interest.

\section*{Required:}

1. Compute the amount of the equal payments that you must make.

2. What is the total amount of interest that you will pay during the four years?

3. Complete the following schedule:

4. Explain why the amount of interest expense decreases each year.
5. To reduce the total amount of interest paid on this note, you considered the possibility of making equal payments every three months (four payments per year). Compute the amount of the equal payments that you must make, and the amount of interest that will be savcd ovcr the life of the note.

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Cash Date Payment 1/1/2011 12/31/2011 12/31/2012 12/31/2013 12/31/2014 Totals Debt Payment Schedule Interest Expense Decrease in Principal Unpaid Principal