# Commission deductions

Some foreign exchange providers charge a commission on any transactions involving foreign exchange.

This commission is usually a percentage of the value of the money being exchanged and the amount is deducted from the total cash received during the transaction.

### Example

Anne is going to Spain on holiday and changes $$\pounds300$$ to euros.

The bank in which she is exchanging the money charges $$5\%$$ commission.

The exchange rate is $$\pounds1 = 1.58$$ euros.

How many euros does she get after paying the commission?

### Answer

One pound is $$\euro1.58$$

Amount of euros$$= 300 \times 1.58 = 474$$

Anne would get $$\euro474$$ before commission is charged.

Commission charge $$= 5\%$$ of $$474 = 23.70$$

Amount after commission $$= 474 – 23.70 = 450.30$$

Anne would receive $$\euro450.30$$

Question

James is going on holiday to America.

He has $$\pounds500$$ spending money which he exchanges to dollars at the bank.

The bank is offering an exchange rate of $$\pounds1 = 1.55$$ US Dollars.

The bank also charges a commission of $$5\%$$ on any transactions.

How many dollars will James receive?

One pound is $$\1.55$$

Amount of dollars$$= 500 \times 1.55 = 775$$

James would get $$\775$$ before commission is charged.

Commission charge$$= 5\% of 775 = 38.75$$

Amount after commission $$= 775 – 38.75 = 736.25$$

James will receive $$736.25$$ dollars.

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