You manage a McDonald's in Germany. At the beginning of the year, the exchange rate was $1 = 1Euro. At the end of the year, the exchange rate is $1 = .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?
A)10%
B)90%
C)11.11%
D)unkown from information given

Question

Quizplus · Accepted Answer

At the beginning of the year, 1 Euro = $1, so 450,000 Euros = $450,000. At the end of the year, 1 Euro = $1/0.90 = $1.1111, so 450,000 Euros = $450,000 * 1.1111 = $500,000. The profits in terms of dollars have increased from $450,000 to $500,000, which is an increase of $50,000 on $450,000, or 11.11%.

You Manage a McDonald's in Germany