Question

Aggie is an australian exchange sudent in china, and she currenly has 14,000 yuan in her bank account. If the exchange rate changes from 1 australian dollar to 6.21 yuan to 1 australian dollar 6.37 chinese yuan, what happens to the value in australian dollars of the money in aggies bank account

Answer 1

Explanation:

Amount in Aggie bank account = 14,000 yuan

Initial exchange rate:

1 Australian dollar = 6.21 yuan

Initial amount in Australian dollars will be;

x aus dollar = 14,000 yuan

cross multiply

6.21x = 14,000

x = 14,000/6.21

x = 2,254.428 australian dollars

If the exchange rate increases to 6.37 Chinese yuan, her new balance in Australian dollars will be y;

1 Australian dollar = 6.37 yuan

y Australian dollar = 14,000 yuan

cross multiply

6.37y = 14,000

x = 14,000/6.37

y = 2,197.80 Australian dollars

The change in her account balance due to increase in exchange rate is y-x

y-x = 2,197.80 - 2,254.428

y-x = -56.626 aus dollars

This negative values shows a decrease in her account balance by 56.626 aus dollars due to increase in the exchange rate.