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An American firm is evaluating an investment in Mexico The project costs 700 million pesos, and it is expected to produce an income of 400 million pesos a year in real terms for each of the next 3 years. The expected inflation rate in Mexico is 5% a year, and the firm estimates that an appropriate discount rate for the project would be about 6% above the risk-free rate of interest Calculate the net present value of the project in US dollars. Exchange rates are given in Table 221 The interest rate is about 45% in Mexico and 25% in the United States (Do not round Intermediate calculations. Enter your answer in thousands rounded to 2 decimal places.) NPV Country Currency Exchange Rate Europe Eurozone countries Euro (EUR or ) 1.217* Sweden Krona (SEK) 8.561 Switzerland Franc (CHF) .983 United Kingdom Pound (GBP or ) 1.393 Americas Brazil Real (BRL) 3.484 Canada Dollar (CAD) 1.284 Mexico New peso (MXN) 18.846 Asia/Africa Australia Dollar (AUD) 1.322 China Yuan (CNY) 6.324 China (Hong Kong) Dollar (HKD) 7.847 India Rupee (INR) 66.910 Japan Yen (JPY or ) 109.430 South Africa Rand (ZAR) 12.433 South Korea Won (KRW) 1,081.200 Direct quotes (number of US dollars per unit of foreign currency). Other quotes are Indirect (units of foreign cur rency por U.S. dollar Source: The New York Times April 26, 2018

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