[MOVED] finance: exchange rates, simple-interest investments

kathy's

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Dec 20, 2005
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I was wondering if you could possibly check my work. Thanks!

1) Bella has decided to take 10 000 Krones on her trip to Denmark. The exchange rate is $1 CDN (one dollar, Canadian) for 4.3309 Krones. The exchange agency had $5 service charge for making the exchange. How much did Bella pay in Canadian dollars?

I got: $235.90. Is this right???

2) Hal invested $2500 at 4 ¾% simple interest. Determine the accumulated amount when he withdrew the investment at the end of 5 years.

First off, what is 4 ¾% percentage wise? I don't know were to start. Thank you.
 

stapel

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1) How many times does 4.3309 fit into 10 000? (Hint: Divide.) This gives you the number of Canadian dollars required. Now add the exchange fee.

Note: Since C$235.90 × (4.3309 Kr / C$1) = 1021.66 Kr, it is unlikely that your solution is correct.

2) Four and three-quarter percent, "percentage-wise", is four and three-quarter percent. That is to say, the interest rate is already given as a percentage. Now apply the simple-interest formula you've memorized, with P = 2500 and t = 5, to find the value of the interest I. Then add this to the principle P to get the total value.

Eliz.
 

kathy's

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so for the second I got the answer: 3000.00 is that right???
 

stapel

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For the total accumulated value to be $3000, the interest for the five years would have to have been $500. That is, the interest would have had to have been $100 per year.

But one hundred dollars represents 100/2500 = 1/25 = 0.04 = 4% interest, rather than 4<sup>3</sup>/<sub>4</sub>% interest.

Eliz.
 

Denis

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Feb 17, 2004
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Kathy, 4 3/4 % is used for "readability": 4 and 3/4 percent.

BUT when you use such a percentage to do a calculation,
you MUST divide it by 100; so:
4 3/4 = 4.75 ; 4.75 / 100 = .0475

So the interest on $2500 for 1 year = 2500 * .0475 = ?
OK :?: :?:
 
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