2.1 Converting currencies
Often when you are abroad, or buying something from the internet from another country, the price will be given in a different currency. You’ll want to be able to work out how much the item costs in your own currency so that you can make a decision about whether to buy the item or not. Let’s look at an example.
Case study _unit3.2.1 Example: Pounds and euros
a.You are in Spain and want to buy a souvenir. The price is €35 (35 euros). You know that:
£1 = €1.15
Method
Look at the diagram below. In order to get from 1 to 1.15, you must multiply by 1.15. Following that, to get from 1.15 to 1, you must divide by 1.15.
In order to go from pounds to euros then, you multiply by 1.15 and to convert from euros to pounds, you divide by 1.15.
Since the souvenir costs €35, you do:
€35 ÷ 1.15 = £30.43 (rounded to two decimal places)
b.You are at the airport on the way back from your holiday and have £50 cash left. You want to buy some aftershave that costs €58. Can you afford it? You know that:
£1 = €1.15
Method
Referring back to the diagram above, you want to convert pounds to euros in this example so you must multiply by 1.15. You do:
£50 × 1.15 = €57.50
This means you cannot afford the aftershave.
Before you try some for yourself, let’s look at one more example. This time involving pounds and dollars.
Case study _unit3.2.2 Example: Pounds and dollars
a.You want to buy an item from America. The cost is $120. You know that £1 = $1.30. How much does the item cost in pounds?
Similarly to before, you can see from the diagram that in order to go from dollars to pounds you must divide by 1.30.
To work out $120 in pounds then, you do:
$120 ÷ 1.30 = £92.31 (rounded to two decimal places)
b.You are sending a relative in America £20 for their birthday. You need to send the money in dollars. How much should you send?
To convert from pounds to dollars, you need to multiply by 1.30. So to change £20 into dollars you do:
£20 × 1.30 = $26
You need to send $26.
Activity _unit3.2.1 Activity 3: Currency conversions
Sarah sees a handbag for sale on a cruise ship for €80. She sees the same handbag online for £65. She wants to pay the cheapest possible price for the bag. On that day the exchange rate is £1 = €1.25. Where should she buy the bag from?
Josh is going to South Africa and wants to change £250 into rand. He knows that £1 = 18.7 rand. How many rand will he get for his money?
Alice is returning from America and has $90 left over to change back into £s. Given the exchange rate of £1 = $1.27, how many £s will Alice receive? Give your answer rounded to two decimal places.
Answer
For this question you can either convert from £ to € or from € to £.
Converting from £ to €:
£65 × 1.25 = €81.25
Sarah should buy the bag on the ship.
Converting from € to £:
€80 ÷ 1.25 = £64
Sarah should buy the bag on the ship.
You need to convert from £ to rand so you do:
£250 × 18.7 = 4675 rand
You need to convert from $ to £ so you do $90 ÷ 1.27 = £70.87 (rounded to two d.p.).
Hopefully you are now feeling confident with converting between currencies. The next part of this section deals with converting other units of measure between different systems – centimetres to inches, pounds to kilograms etc. These conversions are incredibly similar to converting currency and the conversion rate will always be given to you so it’s not something you have to remember.