Computing an Exchange Amount Using a Direct Quote An American business must pay 1,000 euros to a German firm and the current exchange rate is $1.1293 dollars per euro, how many dollars will be required for thistransaction?

Question

Computing an Exchange Amount Using a Direct Quote

An American business must pay 1,000 euros to a German firm and the current exchange rate is $1.1293 dollars per euro, how many dollars will be required for this transaction?

Accepted Answer

STEP 1: Formulate a Solution Strategy

The dollar amount required for this transaction can be computed using the following equation:

Amount in dollars = [latex] \frac {dollar amount}{ foreign currency} imes [/latex]€1,000

Note that after finding the direct quote you must then multiply the amount by the amount of foreign currency required for the transaction in order to obtain the required dollar amount.

STEP 2: Crunch the Numbers

Substituting into the equation, we compute the dollar amount required as follows:

Amount in dollars = [latex] \frac {\$ 1.1293}{ €} imes [/latex] €1,000 = $1,129.30

STEP 3: Analyze Your Results

For the American business to pay the German firm €1,000, it will require $1,129.30 to complete the transaction.

Question 16.1: Computing an Exchange Amount Using a Direct Quote An America...

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