Question

Shawn purchased US$9,000 from a bank in America, which charged him a commission of 0.9%, and sold the US dollars to a bank in Canada, which charged him a 0.22% commission. How much money did he lose or gain? Assume that the exchange rate was C$1 = US$0.8925.

Answer 1

Shawn experienced a loss of US$109.07 after incurring commission charges for buying and selling US dollars, with an exchange rate of C$1 = US$0.8925.

Step-by-step explanation:

Shawn incurred a loss from the currency exchange due to the commissions charged by the banks. Initially, in the U.S., the bank charged a 0.9% commission on the $9,000, which amounts to $81 (0.009 x 9000). After this commission, Shawn is left with $8919.

When converting his US dollars to Canadian dollars, the exchange rate is C$1 = US$0.8925. Therefore, the total Canadian dollars he receives is $8919 / 0.8925 = C$9998.88. However, he sells this amount to a bank in Canada, which charges a 0.22% commission. The commission is C$21.99714 (0.0022 x 9998.88), so Shawn is left with C$9976.88 approximately after the commission is deducted.

Thus, if we convert this amount back to US dollars using the provided exchange rate, Shawn has US$8890.93 (9976.88 x 0.8925). Comparing this with his initial US$9000, Shawn's loss is US$109.07 (9000 – 8890.93).