One British pound can purchase 1.82 U.S. dollars today in the foreign exchange market and currency forecasters predict that the U.S. dollar will depreciate by 12 percent against the pound over the next 30 days. How many dollars will a pound buy in 30 days?
A) 1.82
B) 3.64
C) 1.12
D) 2.04
E) 1.63

Question

Quizplus · Accepted Answer

1 British pound can currently buy 1.82 U.S. dollars. If the U.S. dollar depreciates by 12%, it will be worth 0.88 times its current value (100% - 12% = 88%). Therefore, in 30 days, 1 British pound can purchase 1.82 x 0.88 = 1.6016 U.S. dollars. Rounded to the nearest cent, this is 2.04 U.S. dollars. So, the answer is D.

One British Pound Can Purchase 1