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The current euro / US dollar exchange rate is €1 : $2. ABC Co, a Eurozone company, makes a $1,000 sale to
a US customer on credit. By the time the customer pays, the Euro has strengthened by 20%.
What will the Euro receipt be?
A €416.67
B €2,400
C €600
D €400The first currency is euro then I should multiply but in the answer they have divide why sir ?
But look at the way the question is worded!!
It says that 1 euro = 2 $’s
If the euro strengthens then 1 euro = 2 + 20% = 2.4 $’s
If 2.4$’s = 1 Euro, then 1$ = 1/2.4 euros
So we divide by the exchange rate to convert $’s to Euros.
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