1. A company plans an investment of MXN 50 million in Mexico. The expected cash flows over the next four years are as follows, MXN 15m, MXN 16m, MXN 17m, and MXN 18m. The spot rate today is $0.45/MXN. The annual inflation rate is expected to be 12% in Mexico and 3% in the U.S. for the next four years. The minimum required rate of return for all projects to be accepted in the company is 16%. Find the NPV of the project by converting the cash flows to US dollars and using the US required rate of return.

A:$1,540,777.90

B:$8,498,689.96

C:$5,611,468.08

D:$6,089,349.49

2. A company plans an investment of MXN 50 million in Mexico. The expected cash flows over the next four years are as follows, MXN 15m, MXN 16m, MXN 17m, and MXN 18m. The spot rate today is $0.45/MXN. The annual inflation rate is expected to be 12% in Mexico and 3% in the U.S. for the next four years. The minimum required rate of return for all projects to be accepted in the company is 16%. Find the NPV of the project in Mexican pesos and translate into U.S. dollars using the current exchange rate.

A:$5,611,468.08

B:$1,955,672.50

C:$4,345,672.50

D:$5,611,468.08

3. You are planning to open a 100% owned subsidiary in France. The following cash flows are projected for the next five years. The spot rate for the Euro is $1.10/. The dollar is expected to appreciate 2% per year for the next five years.

Sales 10,000,000 Variable Costs 4,000,000 Administrative Cost 1,000,000 Royalties 2,000,000 Earnings before taxes 3,000,000 Taxes 600,000 Earnings after taxes 2,400,000

Withholding Tax 8.00% Overseas Corporate Tax 20.00% US Tax 35.00% Investment $10,000,000.00 Dividend rate 50.00% Required return 16.00%

You expect to make dividend payments of 50% every year to the parent. Dividends repatriated to the U.S are subject to 8% withholding tax. Royalties sent back to the parent should be considered as cash flows from the parent's perspective. If the total investment from the parent company is $10,000,000 in year 0, is the project acceptable from the parent's point of view? Assume the required rate of return on this project is 16%. The U.S. tax rate is 35%. Show all work for full credit.