You manage a McDonald's in Germany. At the beginning of the year, the exchange rate was $1CDN = 1Euro. At the end of the year, the exchange rate is $1CDN = .90Euro. You report profits of 450,000 Euros. How much have your profits increased in terms of dollars from the exchange rate change during the year?

Question

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At the beginning of the year, 450,000 Euros would have been equivalent to 450,000 CDN dollars (1:1 exchange rate). At the end of the year, with the exchange rate at $1CDN = .90Euro, 450,000 Euros would convert to 500,000 CDN dollars (450,000 / 0.9). This represents an increase of 50,000 CDN dollars on the original 450,000 CDN dollars, which is an 11.11% increase (50,000 / 450,000 = 0.1111 or 11.11%).

You Manage a McDonald's in Germany