Exchange Rates

I have an assignment in my International Trade class. Here it is:

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Congratulations, you just won the Irish Lottery! You bought a ticket while you were on vacation in Ireland, and you just won a 1 million Euro jackpot after all taxes were taken out.

1. If the current exchange rate is US$1 equals 1.25 Euros, how much did you win in US dollars?
2. Suppose that the interest rate in Irish banks is 5% for a one year CD. In the USA, the rate is 2% for a one year CD. If you left your winnings in Ireland, how many Euros would you have in a year? If you had taken your winnings back to the USA, how many dollars would you have?
3. Suppose when you cashed in your CD in Ireland a year from now, the exchange rate had changed from US$1 to 1.25 Euro, to US$1 to 1.30 Euro. How much would your Irish bank account be worth in US$ at that point? Did you do better off leaving your winnings in Ireland or bringing them home to the USA?

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Here are my calcs:

Irish Lottery Winnings: €1,000,000
US $1
Euro €1.25
Exchange Rate = $.80
US Winnings = $800,000
Irish Savings Earnings after one year =
( €1,000,000*.05)+€1,000,000=€1,050,000 Converted to US = $840,000
US CD Earnings after one year = ($800,000*.02)+$800,000=$816,000

Second Part:
US: $1 Euro: €1.30 Exchange Rage is $.77
Irish Savings Earnings after one year: €1,050,00 Equals in US $807,692.31
US Winnings: $769,230.77
US CD Earning after one year: ($769,230.77*.02)+$769,230.77=$784,615.38


Sorry so long. Does this look right? Thanks

You're taking classes?

/not a business guy otherwise I would try and help

thats cool that you won a million euros, congrats

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Originally Posted by givememyleg

thats cool that you won a million euros, congrats

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SHIP IT! congrats GMML

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Originally Posted by givememyleg

thats cool that you won a million euros, congrats

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simple is funny :lol:

i don't think the question is asking you to compound interest, which is what you did on your last line of the solution.

i thought this was a scam thread for a minute

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Originally Posted by zxqv8

i thought this was a scam thread for a minute

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Jamaican switch?

your reply:

Im not stupid, I know I didnt win any european lottery and no I will not send any money to your nigerian bank acct so that you can get access to your fathers will who was a chief and was in possession of the ticket prior to his death. Everyone knows about your countries stupid scams, and its really pitiful that the legacy of africa will be aids and fraudulent emails. I will be forwarding this email to my local FBI office, I hope you get caught.



ofc this is the funniest when your professor is black because of the underlying racism.

where do i buy a ticket for this??

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Originally Posted by Miffed22001

where do i buy a ticket for this??

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There are no bad beat jackpots in lotteries.

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Originally Posted by 2_Thumbs_Up

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Originally Posted by Miffed22001

where do i buy a ticket for this??

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There are no bad beat jackpots in lotteries.

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o rly?