Question

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 Mexico. The project will cost 1,025,000 pesos. The cash flows are expected to be 400,000 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

Your Answer:

Answer 1

Cost in USD = Cost in Euros*Exchange rate
=(125*7 +650)*0.865
=$1,319.125
i.e. 1,319
Year	0	1	2	3	4	5
Cash flows in Peso	-1025000	400000	400000	400000	400000	400000
Exchange rate as per Interesr rate parity	19.07	19.80346154	20.56513314	21.3560998	22.17748825	23.03046857
Cash flows in USD	-53749.34452	20198.489	19450.39681	18730.01175	18036.30761	17368.29621
PVF	1	0.909090909	0.826446281	0.751314801	0.683013455	0.620921323
PV of cash flows	-53749.34452	18362.26273	16074.70811	14072.13505	12319.04078	10784.34546
NPV	17863.1476