A bank in Toronto charges 1.50% commission to buy and sell currencies. Assume that

the current exchange rate is US$1 = C$1.3847.

a. How many Canadian dollars will you have to pay to purchase US$1,405?

Round to the nearest cent

b. How much commission in Canadian dollars (C$) will you pay the bank for the above transaction?

Round to the nearest cent

To solve these problems, we need to determine both the total amount in Canadian dollars (C$) required to purchase US$1,405 and the commission paid to the bank for this transaction.

### Part a: Calculating the Total Amount in Canadian Dollars

First, we calculate the amount in Canadian dollars required to purchase US$1,405 at the exchange rate of US$1 = C$1.3847.

\[ \text{Amount in C$} = \text{Amount in US$} \times \text{Exchange Rate} \]

\[ \text{Amount in C$} = 1405 \times 1.3847 \]

Calculate the product:

\[ \text{Amount in C$} = 1944.3035 \]

Next, round to the nearest cent:

\[ \text{Amount in C$} \approx 1944.30 \]

So, you will have to pay approximately **C$1944.30** to purchase US$1,405.

### Part b: Calculating the Commission

The commission is 1.50% of the total amount in Canadian dollars.

\[ \text{Commission} = \text{Amount in C$} \times \text{Commission Rate} \]

\[ \text{Commission} = 1944.30 \times 0.015 \]

Calculate the product:

\[ \text{Commission} = 29.1645 \]

Next, round to the nearest cent:

\[ \text{Commission} \approx 29.16 \]

So, the commission you will pay the bank is approximately **C$29.16**.

### Summary

a. To purchase US$1,405, you will have to pay approximately **C$1944.30**.

b. The commission you will pay for the transaction is approximately **C$29.16**.

Would you like more details or have any questions?

Here are 8 related questions to expand your understanding:

1. What would the total cost in Canadian dollars be if the commission rate were 2% instead of 1.50%?
2. How many Canadian dollars would you need to purchase US$2,000 at the same exchange rate and commission rate?
3. What is the formula for calculating the total cost including commission for any given exchange rate and commission rate?
4. How much commission would you pay if you were purchasing US$1,000?
5. What would be the total cost in Canadian dollars if the exchange rate changed to US$1 = C$1.4000?
6. How does the commission rate affect the overall cost of purchasing foreign currency?
7. If you need to purchase US$5,000, how much commission would you pay at the 1.50% rate?
8. How would the calculations change if you were selling US dollars instead of buying them?

**Tip:** When dealing with currency exchange and commissions, always calculate the base amount first using the exchange rate, then

Learn how to calculate currency exchange from US$1,405 to Canadian dollars (C$) at an exchange rate of US$1 = C$1.3847, including the commission fee of 1.50%. Understand the detailed steps and formulas used for conversion and commission calculation. Suitable for advanced high school students and learners interested in financial mathematics.

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