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Jimjam is a company based in India, where the currency is the Indian Rupee (IR). They owe money
to a supplier in Ruritania, where the currency is Ruritanian Dollars (R$). The amount owing is R$
240,000.
The current exchange rate is IR/R$ 8.6380 – 9.2530
How many Indian Rupees will Jimjam have to pay?Cannot understand why R$ 240,000 * 9.2530.
As far as im concerned rupes are more vaulable. Buying R$240,000 would therefore cost (240,000/8.6380)=27,784. (Less rupes gets more R$.) ‘1IR=8.6380 – 9.2530’
Surley 240,000 INDIAN RUPES would get (240,000*8.6380)=2,073,120
Can you please help?
Thanks
Rupees are not more valuable. 1 R$ is worth 8.6380 Rupees (if the company is buying Rupees / selling R$) or 9.2530 Rupees (if the company is selling Rupees – buying R$).
This is the way exchange rates are given in the exam, and I explain all of this in detail in my free lectures.
(It seems that maybe you are using the lecture notes without watching the lectures. If that is the case then it is pointless because they are lecture notes and it is in the lectures that I explain and expand on the notes. If you are not watching the lectures for any reason then you need to buy a Study Text and study from there.)
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