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    US dollar vs Euro

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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.

    If the current exchange rate is US$1 equals 1.25 Euros, how much did you win in US dollars?
    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?
    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?

    Be sure to show all calculations.

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    https://brainmass.com/economics/exchange-rates/us-dollar-vs-euro-66506

    Solution Preview

    Hello!
    Here are your answers.

    - If the current exchange rate is US$1 equals 1.25 Euros, how much did you win in US dollars?
    We have the relationship:

    1 dollar = 1.25 euros

    Therefore,

    1 euro = 1/1.25 dollars = 0.80 dollars

    So, if you won 1,000,000 euros, then that's equivalent to 1,000,000*0.80 = 800,000 dollars

    - If you left your winnings in Ireland, how many Euros would you have in a year?
    The rate in Irish banks is 5%. So, if you had ...

    Solution Summary

    US dollar vs Euro is determined.

    $2.19