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Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams
Free ACCA & CIMA online courses from OpenTuition
Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams
Hello Sir,
If we have $7,874,016 and we want the equivalent in pounds, then it means we are selling the first currency which is ($). The appropriate rate to use should then be the higher rate which is £1.6283. This is the understanding from previous studies.
However, you divided the $7,874,016 with the lower rate which is £1.6201.
Could you please clarify?
Thank you sir.
In this example we are buying dollars (not selling them), so that we will have enough to later (when interest is added) to be able to pay the $8M.
Hello Sir, in example 6 while borrowing, we divided the 5M with 1+the interest rate. but in example 7 the amount borrowed is multiplied with 1+the interest.
may you please explain why we cant divide the amount to be borrowed with the interest in example 7.
thanks
If you borrow money, then at the end of the period you are owing more money.
The question says 3 months interest rate why have you converted it yet again to a monthly rate
I do actually explain in the lecture that interest rates are always quoted as annual rates even though they only apply to loans and deposits for the period stated (in this case 3 months).
If the loan or deposit was for 6 months then the interest rate quoted would still be quoted as an annual rate, but would be a different annual rate.
Hello, i am really confused about when to divide and when to multiply. Can someone help me please. Thank you
Have you watched the first in this series of lectures?
Basically this is the core problem most students faced,
Just remember one simple thing you have to pay high and receive low amount… so do your calculations in that way.
Use the following table
First currency. Second currency
Payments _We buy Low rate High rate
We sell. High. Low
Conversion Division Multiplication
Use cross multiplication, if $1.6= 1 pound , then $8M = ?
If you want to deposit $’s then you need to buy $’s in order to have $’s to put on deposit.
Thank you. Helps!
You are welcome 🙂
Hi Sir,
When you convert the $ deposit of 7,874,016 to find out how many pounds you need to borrow, shouldn’t you divide by 1.6283 because you will have to sell $’s to buy pounds?
same question sir, kindly reply
I did reply the same day – the reply is above the question 🙂
Always work on the assumption that you’re at a disadvantage, you need to borrow, what rate makes you borrow the most?
Thanks. Finally you said it the easy way! I had been so confused.