Answer:
(a) A = 0.00278787878787878x
(b) B = 0.00235294117647058x + 3
(c) The answers are as follows:
For buying by credit card
For 700 BWP: Cost = A = £1.95
For 800 BWP: Cost = A = £2.23
For 800 BWP: Cost = A = £2.79
For buying from a Bureau de Change
The equation (4) is used as follows:
For 700 BWP: Cost = B = £4.65
For 800 BWP: Cost = B = $4.88
For 1000 BWP: Cost = B = £5.35
(d) You would have to buy 6,897.54 pulas for the cost to be the same whether you use a credit card or cash.
Explanation:
(a) by credit card
For the exchange rate, we have:
8.25 BWP = £1 ⇒ 8.25 / 8.25 BWP = £1 / 8.25 = 1.00 BWP = £0.121212121212121
The expression can therefore be written as follows:
A = £0.121212121212121 * r * x ................. (1)
Where;
A = cost (including commission) of buying a particular number of Botswana pulas by credit card
r = commission on a credit card transaction = 2.3%, or 0.023
x = the number of pulas bought
Substituting for r into equation (1), we have:
A = £0.121212121212121 * 0.023 * x
A = 0.00278787878787878x ................. (2)
Equation (2) is the expression.
(b) from a Bureau de Change
For the exchange rate, we have
8.5 BWP = £1 ⇒ 8.5 / 8.5 BWP = £1 / 8.5 = 1.00 BWP = 0.117647058823529
B = (£0.117647058823529 * r * x) + F ................. (3)
Where;
B = cost (including commission) of buying a particular number of Botswana pulas by from a Bureau de Change.
r = commission charged by Bureau de Change. = 2%, or 0.02
x = the number of pulas bought
F = fee = £3
Substituting for r and F into equation (3), we have:
B = (£0.117647058823529 * 0.02 * x) + £3
B = 0.00235294117647058x + 3 ................. (4)
Equation (4) is the expression.
c. Evaluate each of these expressions for 700 BWP, 800 BWP, and 1000 BWP respectively.
For buying by credit card
The equation (2) is used as follows:
For 700 BWP: A = £0.00278787878787878 * 700 = £1.95
For 800 BWP: A = £0.00278787878787878 * 800 = £2.23
For 800 BWP: A = £0.00278787878787878 * 1000 = £2.79
For buying from a Bureau de Change
The equation (4) is used as follows:
For 700 BWP: B = (£0.00235294117647058 * 700) + £3 = £1.65 + £3 = £4.65
For 800 BWP: B = (£0.00235294117647058 * 800) + £3 = £1.88 + £3 = $4.88
For 1000 BWP: B = (£0.00235294117647058 * 1000) + £3 = £2.35 + £3 = £5.35
d. Hazard a guess as to the number of pulas you would have to buy for the cost to be the same whether you use a credit card or cash.
This can be calculated by equating equations (2) and (4) and then solve for x as follows:
0.00278787878787878x = 0.00235294117647058x + 3
0.00278787878787878x - 0.00235294117647058x = 3
x(0.00278787878787878 - 0.00235294117647058) = 3
x0.0004349376114082 = 3
x = 3 / 0.0004349376114082
x = 6,897.54 pulas
Therefore, you would have to buy 6,897.54 pulas for the cost to be the same whether you use a credit card or cash.