Foreign Exchange (Junior Cert Mathematics): Revision Notes
Foreign Exchange
Foreign Exchange is when you change money from one type (like Euros) to another type (like US Dollars).
An exchange rate is like a rule that tells you how much one unit of money is worth in another type of money.
For example, if the exchange rate is €1 = $1.32, it means 1 Euro is worth 1.32 US Dollars.
Steps to Calculate Foreign Exchange
To convert an amount from one currency to another, follow these simple steps:
- Write the Conversion
- Get 1 on the Left-Hand Side
- Multiply to Get the Value You Want
- Write the Conversion: Start with the exchange rate, making sure the currency you want to convert to is on the right-hand side of the equation.
- Get 1 on the Left-Hand Side: To make calculations easier, you want to express the exchange rate so that 1 unit of currency is on the left-hand side.
Do this by dividing both sides of the equation by the number on the left-hand side.
- Multiply to Get the Value You Want: Once you have 1 unit of the currency on the left-hand side, multiply both sides by the amount you want to convert.
Example: Converting US Dollars to Euro
Let's say the exchange rate is €1 = USD 1.32, and you want to find out how many Euro you would get for USD 200.
Step 1: Write the Conversion
First, write the conversion rate so that Euro is on the right:
Step 2: Get 1 on the Left-Hand Side
Next, we need to express the conversion so that USD 1 is on the left-hand side:
This is done by dividing both sides of the equation by 1.32.
Step 3: Multiply Both Sides
Now that we have USD 1 on the left-hand side, we can multiply both sides by USD 200 to find out how many Euro we would get:
So, USD 200 would be converted to €151.52 at this exchange rate.
Exam Tip: If the exchange rate tells you how much 1 unit of the other currency is worth, just multiply.
If you need to find out how much 1 unit of your currency is worth, divide first, then multiply.
Try it out!
- You have $150 and you want to know how many Euros (€) you will get if the exchange rate is €1 = $1.50.
- You have €200 and you want to know how many British Pounds (£) you will get if the exchange rate is €1 = £0.85.
- You have £50 and you want to know how many US Dollars (USD) you will get if the exchange rate is £1 = USD 1.40.
- You have ¥10,000 (Japanese Yen) and you want to know how many Euros (€) you will get if the exchange rate is ¥100 = €0.80.
Solutions:
- You have $150 and you want to know how many Euros (€) you will get if the exchange rate is €1 = $1.50.
Steps:
- Write Down the Exchange Rate:
- The exchange rate is €1 = $1.50. This means 1 Euro is worth 1.50 US Dollars.
- Make It Easy to Work With:
- We want to know how much $1 is worth in Euros.
- To do this, we divide both sides by $1.50:
- $1 = €(1 ÷ 1.50)
- $1 = €0.6667 (This means 1 US Dollar is worth 0.6667 Euros)
- Multiply to Find Out How Much $150 Is in Euros:
- Now that we know how much $1 is worth, we multiply by the amount we have, which is $150.
- € = 0.6667 × 150 = €100 So, $150 is worth €100.
- You have €200 and you want to know how many British Pounds (£) you will get if the exchange rate is €1 = £0.85.
Steps:
- Write Down the Exchange Rate:
- The exchange rate is €1 = £0.85. This means 1 Euro is worth 0.85 Pounds.
- Multiply Directly:
- Since the exchange rate is already given for €1, we don't need to adjust it. We can directly multiply by the amount of Euros you have.
- £ = 0.85 × 200
- Calculate:
- £ = £170 So, €200 is worth £170.
- You have £50 and you want to know how many US Dollars (USD) you will get if the exchange rate is £1 = USD 1.40.
Steps:
- Write Down the Exchange Rate:
- The exchange rate is £1 = $1.40. This means 1 Pound is worth 1.40 US Dollars.
- Multiply Directly:
- Since the exchange rate tells us how much 1 Pound is in Dollars, we multiply by the amount of Pounds you have.
- $ = 1.40 × 50
- Calculate:
- 70 So, £50 is worth $70.
- You have ¥10,000 (Japanese Yen) and you want to know how many Euros (€) you will get if the exchange rate is ¥100 = €0.80.
Steps:
- Write Down the Exchange Rate:
- The exchange rate is ¥100 = €0.80. This means 100 Yen is worth 0.80 Euros.
- Make It Easy to Work With:
- To find out how much ¥1 is worth in Euros, divide both sides by 100:
- ¥1 = €(0.80 ÷ 100)
- ¥1 = €0.008
- Multiply to Find Out How Much ¥10,000 Is in Euros:
- Now multiply by the amount of Yen you have:
- € = 0.008 × 10,000
- Calculate:
- € = €80 So, ¥10,000 is worth €80.
