Question

Your company is looking at a new project in Mexico. The project will cost 900,000 pesos....

Your company is looking at a new project in Mexico. The project will cost 900,000 pesos. The cash flows are expected to be 375,000 pesos per year for 5 years. The current spot exchange rate is 19.07 pesos per dollar. The risk-free rate in the US is 4%, and the risk-free rate in Mexico 8%. The dollar required return is 10%. What is the net present value of this investment in U.S. Dollars? DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ROUND ANSWER TO THE NEAREST CENT

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

EXCEL FORMULA:

FEEL FREE TO ASK DOUBTS... PLEASE RATE MY ANSWER

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Question 4 (1 point) You are planning a trip to Paris. Your hotel will cost you...
Question 4 (1 point) You are planning a trip to Paris. Your hotel will cost you €125 per night for 7 nights. You expect to spend another €650 for meals, tours, souvenirs, and so forth. How much will this trip cost you in U.S. dollars if €1 = $0.865? DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ROUND ANSWER TO THE NEAREST DOLLAR Your Answer: Question 5 (1 point) Your company is looking at a new project in...
Apex, Inc. is a U.S.-based firm investing in a two-year project in Mexico. The present exchange...
Apex, Inc. is a U.S.-based firm investing in a two-year project in Mexico. The present exchange rate is 16 Mexican pesos per U.S. dollar. It is estimated that Mexico’s currency will be devalued in the international market at an average 2.7 % per year relative to the U.S. dollar over the next several years. The estimated before-tax net cash flow (in pesos) of the project is a follows: End of Year Net Cash Flow (pesos) 0 - 900,000 1 480,000...
Apex, Inc. is a U.S.-based firm investing in a two-year project in Mexico. The present exchange...
Apex, Inc. is a U.S.-based firm investing in a two-year project in Mexico. The present exchange rate is 15 Mexican pesos per U.S. dollar. It is estimated that Mexico’s currency will be devalued in the international market at an average 2.1 % per year relative to the U.S. dollar over the next several years. The estimated before-tax net cash flow (in pesos) of the project is a follows:                                     End of Year    Net Cash Flow (pesos)                                                 0                      - 900,000                                                 1                         480,000                                                 2                        ...
A U.S. company is considering a project in Great Britain that would require an investment today...
A U.S. company is considering a project in Great Britain that would require an investment today of 5 million Pounds. The project would last 4 years and it would generate after-tax cash flows of 1.8 million Pounds per year. The company’s weighted average cost of capital is 10% per year, the U.S. risk-free interest rate is 5% per year, the British risk-free interest rate is 4% per year, and the spot exchange rate is 0.57 British Pounds per U.S. dollar....
Etemadi? Amalgamated, a U.S. manufacturing? firm, is considering a new project in Portugal. You are in?Etemadi's...
Etemadi? Amalgamated, a U.S. manufacturing? firm, is considering a new project in Portugal. You are in?Etemadi's corporate finance department and are responsible for deciding whether to undertake the project. The expected free cash? flows, in? euros, are shown? here: Year 0 1    2    3    4 Free Cash Flow ?(euro€ ?million) ?15.1 9.5 10.4 10.8 12.1 You know that the spot exchange rate is $0.86/€. In? addition, the? risk-free interest rate on dollars is 4.1% and the? risk-free...
2 Suppose you are a U.S. investor who is planning to invest $785,000 in Mexico. Your...
2 Suppose you are a U.S. investor who is planning to invest $785,000 in Mexico. Your Mexican investment gains 10 percent. If the exchange rate moves from 12.2 pesos per dollar to 12.5 pesos per dollar over the period, what is your total return on this investment?
Suppose you are a U.S. investor who is planning to invest $865,000 in Mexico. Your Mexican...
Suppose you are a U.S. investor who is planning to invest $865,000 in Mexico. Your Mexican investment gains 10.8 percent. If the exchange rate moves from 13.0 pesos per dollar to 13.3 pesos per dollar over the period, what is your total return on this investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
MM company is considering investing in Project 1 or Project 2. Project 1 generates the following...
MM company is considering investing in Project 1 or Project 2. Project 1 generates the following cash flows: year “zero” = 369 dollars (outflow); year 1 = 106 dollars (inflow); year 2 = 286 dollars (inflow); year 3 = 302 dollars (inflow); year 4 = 192 dollars (inflow). Project 2 generates the following cash flows: year “zero” = 410 dollars (outflow); year 1 = 130 dollars (inflow); year 2 = 100 dollars (inflow); year 3 = 190 dollars (inflow); year...
Consider the following trade situation: The U.S. demand for imports of tomatoes from Mexico is QD...
Consider the following trade situation: The U.S. demand for imports of tomatoes from Mexico is QD = 24 - P The supply of tomatoes to the United States from Mexico is QS = 6 + P The units are million boxes and U.S. dollars per box One U.S. dollar buys 10 Mexican pesos Draw a graph showing clearly the quantity of US imports of tomatoes from Mexico and their price in dollars. [Insert an image of your graph here] There...
What is the net present value of a project that has an initial cash outflow of...
What is the net present value of a project that has an initial cash outflow of $-11,400, at time 0, and the following cash flows for years 1-4? The required return is 10.0%. DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ENTER YOUR ANSWER TO THE NEAREST DOLLAR (e.g. 1250). Year Cash Flows 1 $4,500 2 $4,350 3 $5,400 4 $7,250 Question 1 options: Answer Question 2 (1 point) A project has cash flows of -$163,500, $60,800, $62,300...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT