Directorate: Curriculum FET SUBJECT and GRADE MATHEMATICAL LITERACY GRADE 12 TERM 3 WEEK 1 TOPIC FINANCE AIMS OF LESSONS The week’s lessons will focus on: EXCHANGE RATES - Estimate/calculate the value of a currency in relation to other currencies - Recognise the meaning of ‘strong’ and ‘weak’ currencies. - Understand the ‘buying power’ of a currency in another country RESOURCES Textbook resources Digital resources Please use the notes along with your Please check the following resources: textbook. Please check your https://www.youtube.com/watch?v=SNxCLgujozs textbook for the topic on Exchange https://youtu.be/qm0OdcA7kB0 (afr) Rates. INTRODUCTION The knowledge and skills from previous grades such as: ratio and rates calculations; understanding currencies and exchange rates; rounding and calculator skills. CONCEPTS AND You should be able to do or understand the following in terms of: SKILLS • ratio calculations • exchange rate calculations • understand strong and weak currencies • the buying power of a currency ACTIVITIES/ The material consists of the lesson plan, with notes and activities to work through. ASSESSMENT Activities 1- 3 with relevant notes will cover the following: Exchange rate calculations; Identify weak and strong currencies; The buying power of a currency Before doing Activity 1 -3, first work through the information/notes and all the examples of exchange rate calculations. (There are different methods to solve ratio or exchange rate problems. If you successfully apply the method that you have learned in class, please stick to it. The calculation method used in this lesson plan, is just one of many methods!) CONSOLIDATION • Use your textbook and past question papers to do more activities on exchange rates. • It is important to study previous papers to see questions that relates to the topic done now. By doing this, you will get an idea of how questions could be posed in the end- of-year-examination. • Thank you for showing your first step of independent working/learning. Please consult with your class friends and continue to motivate each other. • In terms of assessment exchange rates in many instances are integrated with other sections within Finance or other topics within Mathematical Literacy. VALUES Exchange rates also prepare you for responsible choices on the global market. FOCUS: EXCHANGE RATES A. What is currency? A currency in general is a system of money used to buy or sell goods/services in a country. The currencies used in the different countries are: Country Name of Currency Currency Symbol/Sign Currency Code South Africa South Africa Rand R ZAR Botswana Botswana Pula P BWP United Kingdom British Pound £ GBP United States of America United States Dollar $ USD B. What are exchange rates? An exchange rate is the rate at which one currency can be exchanged for another or exchange rate is the price of one currency in terms of another currency. For example: The exchange rate is USD $ 1 : R17,44 This means: For every Dollar, one would need or will receive R17,44 or for every Rand, one would need 0,057 dollar ( R1÷ R17,44 ≈ 0,057 dollar) NB: Exchange rates change or fluctuates constantly due to the markets. C. Calculate the value of a currency in relation to other currencies: EXAMPLE 1: Exchange rates between two currencies: Convert $ 3,5 to South African Rand (ZAR), if the exchange rate is: USD $ 1 : R17,44 USD $ 3 : R ? In Rand = 3 ÷ 1 × 17,44 = R52,32 Which means 3 $ = R52,32 EXAMPLE 2: Exchange rates between two currencies: If the exchange rate is: USD $ 1: R17,44 Convert R500 to $ (United States Dollar): USD $ 1 : R17,44 OR R17,44 : 1 USD $ $ ? : R500,00 R500,00 : ? $ In $ = R500,00 ÷ R17,44 Rounded value ≈ $ 28,67 The method used is the following: Divide up/Multiply down/across Which means R500 ≈ $ 28,67 Steps: 1.Write down the exchange rate EXAMPLE 3: Exchange rates between more than two currencies: 2. Write the same currency - given amount Given the following exchange rates: directly beneath each other USD $ 1: P11,83 (BWP) 3. Divide up / Multiply down/across P 1: R1, 43 (ZAR) Please use the method you’ve learned! Convert R500 to $. First Part: Rand to Pula: P 1 : R1, 43 Second Part: Now Pula to Dollar: $ 1 : P11,83 P? : R500 $ ? : P349,6503497 In Pula = R500 ÷1,43 In Dollar = P349,6503497 ÷ P11,83 No early rounding! = P 349,6503497 ≈ $29,56 It means that R500 ≈ $29,56 ACTIVITY 1: Calculate the value of a currency in relation to other currencies 1.1 The exchange rate of South African Rand (R) to the British Pound (£) was R21,50 to £1 on the date, 03 June 2020. 1.1.1 How many Rands could you get for £65,50? 1.1.2 How many Pounds could you get for R1 500? 1.2 Use the exchange rate table to answer the questions that follow: Rand per unit of the foreign currency: 1 foreign currency : R… Country/Region Currency Name & Code Currency Symbol Exchange Rate United States US Dollar (USD) $ 17,11 Britain British Pound (GBP) £ 21,50 Europe Euro (EUR) € 19,17 Foreign Currency per Rand: R1 : …foreign currency Nigeria Nigerian Naira (NGN) ₦ 0,044 Botswana Pula (BWP) P 0,68 India Rupee (INR) ₹ 0,23 1.2.1 Convert the exchange rate to the following: R1 : Euro ₦1: Rand 1.2.2 If a hotel booking costs £125 per night and Bronwyn stays there for 4 nights, calculate how much it will cost her in Rand. 1.2.3 The following table shows au pairs’ salaries in 3 countries: AU PAIRS’ SALARIES IN 3 COUNTRIES Country Salary United States $196 per week Britain £155 per week Botswana P1 500 per week You want to work as an au pair. Which country will pay you the best salary per week? Calculate the weekly income in Rand of all the countries to justify your answer. 1.2.4 Calculate how much foreign currency will you get if you exchange R5 000 for: (a) Euros (b) Naira’s (c) Rupees 1.3 Use the following exchange rate table to convert $115 into South African Rand: 1 British Pound 1,12 Euro 1 Euro 19,02 SA Rand 1 US Dollar 0,79 British Pound FOCUS: ‘Strong’ and ‘Weak’ Currencies NB: A strong currency means that the currency has a higher value or greater worth than another currency A weak currency means that the currency has a lower value or lesser worth than another currency. • The exchange rate of the South African Rand to US Dollar is: $ 1 : R17,11 In this case the US Dollar is the stronger currency because for every dollar you get more than R1. | In this case you get R17,11 for every US Dollar. • The South African Rand is the weaker currency to the US Dollar because for R1 you will only receive less than 1 dollar, in this case approximately $0,06. In conclusion: When one unit of a currency (Dollar) trades for more units of another country (Rand), the Dollar for example, is the stronger currency (in relation to the Rand). ACTIVITY 2: A South African couple visited Nigeria (NGN) and Kenya (KES – Kenyan Shilling). The table below shows the exchange rate between the currencies of the two countries and the South African Rand (ZAR) SOUTH AFRICAN RAND TO FOREIGN CURRENCIES (ZAR) R1,00 : ₦ 0,044 (NGN) (ZAR) R1,00 : K 6,22 (KES) 2.1 A couple budgeted to pay R125 per person for lunch. Calculate the total amount they can spend for lunch in Nigerian Naira. 2.2 Hotel accommodation in Kenya costs K12 700 per couple per night. Dinner costs K1 088,50 per person. They both will have dinner at the hotel’s restaurant five times. Calculate the total amount they will pay in Rand at the end of their ten day stay (9 nights) at the Kenyan hotel. 2.3 Identify the following: 2.3.1 The stronger currency between the South African Rand and the Nigerian Naira. Give an explanation to justify your answer. 2.3.2 The weaker currency between the South African Rand and the Kenyan Shilling. Give an explanation to justify your answer. ACTIVITY 3: The ‘buying power’ of a currency in another country: It is “how much your countries money can buy” in another country. 3.1 A Laptop SONY Vaio / i5 2.40 Ghz / 8GB RAM / 500GB HDD price is ¥ 36 000 in Japan. The exchange rate between the Japanese Yen and South African Rand is: ¥ 1 : R0,16. Jeandre makes the statement that R5 700 will be enough to buy the Sony laptop. Verify, showing ALL calculations, whether his statement is valid. ANSWERS: (c) R1 : ₹ 0,23 ACTIVITY 1: R5 000 : ₹? 1.1.1 £1 : R21,50 In Rupees = 5 000 ÷ 1 × 0,23 £65,50 : R? = ₹ 1 150 In Rands = 65,50 ÷ 1 × 21,50 R5 000 : ₹ 1 150 = R1 408,25 £65,50 : R1 408,25 1.3 Dollar to Pounds: $1 : £0,79 $115 : £ ? 1.1.2 £1 : R21,50 In Pounds = 115 ÷ 1 × 0,79 £? : R1 500 = £ 90,85 In Pounds = 1 500 ÷ 21.50 Pounds to Euro: £1 : € 1,12 ≈ £69,77 £ 90.85 : € ? £69,77 : R1 500 In Euro = 90,85 ÷ 1 × 1,12 = € 101,752 €1 : R19,17 1.2.1 Euro to Rand: € 1 : R19,02 € ? : R1 € 101,752 : R? Euro = R1 ÷ R19,17 In Rand = 101,752 ÷ 1 × 19,02 = £0,05216484 = R1 935,32 R1 : £0,05216484 $115 : R1 935,32 1.2.2 R1 : ₦ 0,044 R ? : ₦ 1 ACTIVITY 2: Rand = ₦ 1 ÷ ₦ 0,044 2.1 R1,00 : ₦ 0,044 Total = 125 × 2 = R250 ≈ R22,72727273 R250 :? ₦1: R22,72727273 In Naira = 250 × 0,044 1.2.3 United States: $1 : R17,11 = ₦ 11 $196 : R? 2.2 Accommodation Costs = 12 700 × 9 In Rand = 196 ÷ 1 × 17,11 = K 114 300 = R3 353,56 per week Dinner Costs = 1 088,50 × 2 × 5 Britain: £1 : R21,50 = K10 885 £155 : R? Total Amount = 114 300 + 10 885 In Rand = 155 ÷ 1 × 21,50 = K 125 185 = R3 332,50 per week In Rand: Botswana: R1 : P 0,68 R1,00 : K 6,22 R? : P 1 500 R? : K 125 185 In Rand = 1 500 ÷ 0,68 In Rand = 125 185 ÷ 6,22 = R2 205,88 per week ≈ R20 126,21 Conclusion: United States 2.3.1 Nigerian Naira is the stronger currency.