Question

Before boarding his flight to zurich, switzerland, ryan purchased chf1,450 from his bank when the exchange rate was c$1 = chf0.9714. however, ryan had to cancel the trip. ryan returned to the bank to convert the swiss currency back into canadian dollars. if the exchange rate changed to c$1 = chf0.9864, how many canadian dollars would ryan have lost in these transactions? assume the bank has a 1.65% commission on both the sale and the purchase of the funds.

Answer 1

Ryan would have lost C$71.76 when converting his money to Swiss Francs and back to Canadian dollars due to exchange rate changes and bank commissions.

Step-by-step explanation:

To calculate the loss Ryan would incur due to exchange rate fluctuations and bank commissions, we need to do two sets of calculations: what Ryan originally got for his Canadian dollars and what he'll get back when he converts the Swiss Francs (CHF) back into Canadian dollars (C$).

Initially, Ryan purchased CHF 1,450 at an exchange rate of C$1 = CHF 0.9714. First, we find out how many Canadian dollars Ryan initially exchanged:

1. CHF 1,450 ÷ CHF 0.9714/C$ = C$1,492.77 (amount of Canadian dollars Ryan spent)
2. Then we apply the bank commission of 1.65%: C$1,492.77 × 1.65% = C$24.63
3. Total initial Canadian dollars spent including commission: C$1,492.77 + C$24.63 = C$1,517.40

When Ryan returns the CHF 1,450, the exchange rate has changed to C$1 = CHF 0.9864. Now we find how many Canadian dollars Ryan will receive:

1. CHF 1,450 ÷ CHF 0.9864/C$ = C$1,469.89 (amount Ryan receives before commission)
2. Applying the bank commission of 1.65%: C$1,469.89 × 1.65% = C$24.25
3. Total Canadian dollars returned after commission: C$1,469.89 - C$24.25 = C$1,445.64

Finally, we calculate the loss Ryan incurred:

C$1,517.40 (initial amount with commission) - C$1,445.64 (amount returned after commission) = C$71.76

Ryan would have lost C$71.76 in these transactions.