You invest $50,000 in Germany when the exchange rate is $1.35/€. Your investment gains 13%, and you subsequently exchange the euros back into dollars at a rate of $1.40/€. What is your total percentage return on this investment?

Question

Quizplus · Accepted Answer

Initially, you invest $50,000 at a rate of $1.35/€, which means you can purchase 37,037.04 euros (50,000/1.35).
After the gain of 13%, the value of your investment will be 41,851.85 euros (37,037.04*1.13), and when you exchange these euros back into dollars at a rate of $1.40/€, you will receive $58,592.59 (41,851.85*1.40). 
This means that your total return is $8,592.59 ($58,592.59 - $50,000). 
To calculate the total percentage return, you need to divide this return by the initial investment and express the result as a percentage: 
Total percentage return = ($8,592.59/$50,000) x 100% = 17.19%.
Therefore, the answer is C.

You Invest $50,000 in Germany When the Exchange Rate Is