0580

Time, Currency and Conversions

Number

Calculating with money

  • Amounts are normally written to two decimal places, and the second decimal is kept even when it is zero
    • A calculator showing 1.4 is written as £1.40
  • For large amounts the context may justify rounding to the nearest whole unit instead
  • Money questions frequently combine with percentages, so read carefully for a discount, an increase or a rate of interest

Converting between currencies

  • An exchange rate states what one unit of a currency is worth in another
  • Converting in the direction the rate is written means multiplying, and converting back means dividing
    • With £1 = $1.24, a sterling amount is multiplied by 1.24, and a dollar amount is divided by 1.24
  • Where two currencies have no direct rate, convert through the one they share, in two separate steps
Exam tip

Write the exchange rate down as a line of working before converting: it makes the direction visible and earns the method mark. Then sense-check the size — converting into a currency worth less per unit must give a bigger number, so if the figure moved the wrong way the multiplication and division are swapped.

Worked example

Converting through a third currency

The exchange rates are 1 euro = 163.5 yen and 1 pound = 187.9 yen. Convert 250 euros into pounds.

Solution:

  • Convert euros to yen first, multiplying because the rate is written from euros
  • 250 × 163.5 = 40 875 yen
  • Convert yen to pounds, dividing because the rate is written from pounds
  • 40 875 ÷ 187.9 = 217.535…
  • Rounded to two decimal places, the amount is £217.54