An international bank issues its Traveler credit cards worldwide. When a customer makes a purchase using a Traveler card in currency different from the customer's home currency, the bank converts the purchase price at the daily foreign exchange rate and then charges a 4% fee on the converted cost.
Sara lives in the United States, but is on vacation in India. She used her Traveler card for a purchase that cost 602 rupees (Indian currency) . The bank posted a charge $9.88 to her account that included the 4% fee. What foreign exchange rate, in Indian rupee per one U.S dollar, did the bank use for Sara's charge? Round your answer to the nearest whole number.

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$63

$64

$65

$66

answer is A.

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Detailed Solution

Concept-
Money serves as an exchange medium for all goods and services. Because currencies vary regionally, so do their values. For instance, the currency of America is the dollar, while that of India is the rupee. However, the values of the two currencies are not equal; one dollar in the United States is equivalent to about 60–70 rupees. We must thus locate the Indian rupees that Sara gave the merchant in order to buy something in this solution.
Given the cost of the item = 602 INR
Charge for exchanging = x= 4%-= 0.04
Total amount of bank charge is z = $9.88
The conversion rate and 4% conversion fee are included in the bank fees.
Assuming x is the conversion rate (in USD) , 9.88=x+0.04x

The customer's cost is INR 602 and its equivalent in USD is 9.5.
the conversion rate is as a result =

Hence, the correct answer is option 1) $63

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