You invest $20,000 in France when the exchange rate is $1.22/€. Your investment gains 10%, and you subsequently exchange the euros back into dollars at a rate of $1.36/€. What is your total percentage return on this investment?

Question

Quizplus · Accepted Answer

Initially, you invested 20,000 / 1.22 = €16,393.44
After a 10% gain, your investment is worth 1.1 * €16,393.44 = €18,032.79
When you exchange back to dollars at a rate of $1.36/€, you get $18,032.79 * 1.36 = $24,557.40
Your total return in dollars is $24,557.40 - $20,000 = $4,557.40
Your percentage return is ($4,557.40 / $20,000) * 100% = 22.79%
Therefore, the closest answer is D) 22.62% (rounded to the nearest hundredth).

You Invest $20,000 in France When the Exchange Rate Is