Commission deductions
Some foreign exchange providers charge a commission on any transactions involving foreign exchange.
This commission is usually a percentage of the value of the money being exchanged and the amount is deducted from the total cash received during the transaction.
Example
Anne is going to Spain on holiday and changes \(\pounds300\) to euros.
The bank in which she is exchanging the money charges \(5\%\) commission.
The exchange rate is \(\pounds1 = 1.58\) euros.
How many euros does she get after paying the commission?
Answer
One pound is \(\euro1.58\)
Amount of euros\( = 300 \times 1.58 = 474\)
Anne would get \(\euro474\) before commission is charged.
Commission charge \(= 5\%\) of \(474 = 23.70\)
Amount after commission \(= 474 – 23.70 = 450.30\)
Anne would receive \(\euro450.30\)
Question
James is going on holiday to America.
He has \(\pounds500\) spending money which he exchanges to dollars at the bank.
The bank is offering an exchange rate of \(\pounds1 = 1.55\) US Dollars.
The bank also charges a commission of \(5\%\) on any transactions.
How many dollars will James receive?
