Question

Matthew purchased US$9,000 from a bank in America, which charged her a commission of 0.6%, and sold the US dollars to a bank in Canada, which charged her a 0.25% commission. How much money did she lose or gain? Assume that the exchange rate was C$1 = US$0.8996.

Answer 1

Matthew made a gain of US$2,033.55 by purchasing US dollars, paying a commission, converting them to Canadian dollars, paying another commission, and then converting back to US dollars.

Step-by-step explanation:

The question involves calculating the amount of money lost or gained by Matthew through currency transactions after accounting for commission charges. Matthew first purchased US dollars and then sold them to a Canadian bank.

First, we calculate the commission on the purchase in the US: $9,000 * 0.6% = $54. This means Matthew received $9,000 - $54 = $8,946 after the commission.

When selling to a Canadian bank, we need to convert this amount to Canadian dollars using the exchange rate C$1 = US$0.8996. This is calculated as $8,946 / 0.8996 = C$9,945.27. Then, we calculate the Canadian commission: C$9,945.27 * 0.25% = C$24.86. So, Matthew received C$9,945.27 - C$24.86 = C$9,920.41 after selling the US dollars.

Finally, we convert back to US dollars to find out the net outcome. Using the exchange rate US$1 = C$1 / 0.8996 = US$1.1117, we have C$9,920.41 * US$1.1117 = US$11,033.55. Hence, Matthew gained US$11,033.55 - US$9,000 = US$2,033.55 in the transaction.