Money Revision Notes

Money calculations require careful attention to units and decimal places because money is usually expressed to two decimal places (e.g., £12.34). When adding, subtracting, multiplying, or dividing money amounts, always keep the currency symbol or unit clear to avoid confusion.

For example, if you buy 3 items costing £2.50 each, the total cost is calculated by multiplying:

Total cost = 3 × £2.50 = £7.50. Here, the unit £ is carried through the calculation and the answer is expressed in pounds (£).

• Always write the currency symbol or abbreviation with your answer.
• Keep two decimal places when dealing with money unless otherwise instructed.
• Check your calculations by estimating or using inverse operations.

Currency conversion involves changing an amount of money from one currency to another using an exchange rate. An exchange rate tells you how much one unit of a currency is worth in another currency.

For example, if the exchange rate is 1 USD = 0.85 EUR, this means 1 US dollar is equivalent to 0.85 euros.

To convert an amount from USD to EUR, multiply the amount in USD by the exchange rate: Amount in EUR = Amount in USD × Exchange rate.

• Identify the direction of conversion (which currency to which).
• Use the correct exchange rate for that direction.
• Multiply the amount by the exchange rate to convert currencies.

Suppose you want to convert 150 USD to euros, and the exchange rate is 1 USD = 0.85 EUR.

Step 1: Write down the formula: Amount in EUR = Amount in USD × Exchange rate.

Step 2: Substitute values: Amount in EUR = 150 × 0.85 = 127.5 EUR (or €127.50).

• Always include the currency unit in your final answer.
• Check the calculation with a calculator or estimation.

If you have an amount in a foreign currency and want to convert it back to your own currency, you need the inverse exchange rate.

For example, if 1 USD = 0.85 EUR, then 1 EUR = 1 ÷ 0.85 ≈ 1.176 USD.

To convert 100 EUR to USD: Amount in USD = 100 × 1.176 = 117.6 USD.

• Calculate the inverse exchange rate if not given.
• Multiply the foreign currency amount by the inverse rate.
• Keep track of units carefully to avoid errors.

Always use the most recent exchange rate available, as rates fluctuate regularly.

Round your answers appropriately, usually to two decimal places for money.

When dealing with large amounts, double-check your calculations to avoid costly mistakes.

• Use a calculator for accuracy.
• Write down each step clearly to avoid confusion.
• Be aware of any fees or commissions that might affect the final amount.