P19-3 Exchange rates Fred Nappa is planning to take a wine-tasting tour through
ID: 2382784 • Letter: P
Question
P19-3
Exchange rates Fred Nappa is planning to take a wine-tasting tour through Ital this summer. The tour will cost 2,750 euros () and includes transportation, levels, and a guide. Fred estimates that round-trip airfare from his home in North Carolina to Rome, Italy, will be $1,490; he also will incur another $300 (U.S.) in incidental travel expenses. Fred estimates the cost of meals in Ital to be about 500, and he will take an additional $1,000 to cover miscellaneous expenditures. Currently, the exchange rate is US$1.3411/1.00 or .7456/US$1.00).
a. Determine the total dollar cost of the trip to Italy.
b. Determine the amount of ueros () Fred will need to cover meals and miscellaneous expenditures.
Explanation / Answer
Estimated Tour Cost = 2750 Euros [including Transportation, Levels and Guide]= USD 3688.03 [at present exchange rate]
a. Thus the total USD Dollar cost of the trip to Italy is $3290.
b. The amount of expense estimated by Fred towards Cost of Meals and Miscellaneous Expenditures= US$1000 + US$ 500= US$ 1500; which equals to (1500*0.7456)= Euros 1118.48
The savings of US $ 398.02 will remain after above-mentioned expenses i.e.Euros 296.77 at present exchange rate; which can be used in case of any adverse exchange rate movement against US $ vis-a-vis Euro.
Break-up of Italy tour cost Currency Amount Type of Expense US Dollar 1490 Round-trip airfare US Dollar 300 Incidental travel exps US Dollar 500 Cost of meals US Dollar 1000 Miscellaneous expenditures US Dollar 3290 Grand TotalRelated Questions
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