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Question

An international cruise company offers its guests traveler credit cards when they are aboard. When a customer makes a purchase using his traveler card in a currency other than dollars, the bank converts the purchase price at the daily foreign exchange rate and then charges a 3.5% fee on the converted cost. Mr. Jabar is on a cruise off the coast of Peru. He used his traveler card for a purchase that cost 950 centimos (Peruvian currency). The bank posted a charge of $14.23 to his account that included the 3.5% fee.

Question: What foreign exchange rate, in Peruvian centimos per one US dollar, did the bank use for Mr. Jabar charge? Round your answer to the nearest tenth of a centimo.

Answer 1

The purchase made is X.

It is increased by 3.5%. So

100% + 3.5% = 103.5% = 1.035

1.035X = 14.23

X = 14.23 / 1.035 = 13.75

So 13.75 is 950 centimos...

Therefore $1 = 69.1 centimos is the current exachange rate

The pre-paid card is 1800 centimos = 1800/69.1 = $26.05

1.035 n = 26.05

n = 25.16 = 1738.5