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question 14

Short Answer

Use the table to answer the question.
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Effect of Down Payment on the Cost of a $\$ 120,000$ Home with Interest at $8 \%$

$\begin{array}{ccccc}\text { Down Payment } & \text { Percent } & \text { Total Payment } & \text { Total Payment } & \text { Total Payment } \\\$ 0 & & 20 \text { Years } & 25 \text { Years } & 30 \text { Years } \\\$ 6,000 & 0 \% & \$ 240,895 & \$ 277,854 & \$ 316,987 \\\$ 12,000 & 5 \% & \$ 228,850 & \$ 263,961 & \$ 301,136 \\\$ 24,000 & 10 \% & \$ 216,806 & \$ 250,068 & \$ 285,289 \\\$ 30,000 & 20 \% & \$ 192,715 & \$ 222,282 & \$ 253,588 \\\$ 36,000 & 30 \% & \$ 168,626 & \$ 194,499 & \$ 221,890\end{array}$ What is wrong, if anything, with the following statement? Explain your reasoning. For a $120,000 loan with interest rate 8% and 30% down, the total amount that can be saved by changing the term from 30 years to 25 years is $27,391, because the total amount of payments changes from $221,890 to $194,499.

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Definitions:

Translation Exposure

The risk that a company's financial statements can be affected by changes in exchange rates when foreign operations are translated into the domestic currency.

Dollar/Peso Exchange Rate

The value of one currency expressed in terms of another currency, specifically how many Mexican pesos one US dollar can buy.

Custom-Designed Refrigerators

Refrigeration units that are tailored to the specific requirements or preferences of a user, often involving unique sizes, features, or designs.

Translation Exposure

The potential for a company's financial statements in one currency to be affected by fluctuations in exchange rates when they are translated into another currency.