2) A Firm in the Mexico is considering an investment in Brazil that yields the after tax real (R$) cash flows provided in the time line below. The appropriate discount for similar projects in Mexico is 36.25%. The expected inflation in Brazil is 3% each year for the foreseeable future. The expected inflation in the Mexico is 9% each year for the foreseeable future. The appropriate discount rate for similar projects in Brazil is 28.75%. Assume the parity conditions hold. The current spot rate is 6.2775M$/R$. What is the net present value of the project from the parent and project perspective? Should they accept the project? Show all the necessary calculations to compute the NPV from BOTH the parent and project perspective. -50,000,000 R$ 65,000,000 R$ 50,000,000 R$ 40,000,000 R$ 0 1 2 3 2) A Firm in the Mexico is considering an investment in Brazil that yields the after tax real (R$) cash flows provided in the time line below. The appropriate discount for similar projects in Mexico is 36.25%. The expected inflation in Brazil is 3% each year for the foreseeable future. The expected inflation in the Mexico is 9% each year for the foreseeable future. The appropriate discount rate for similar projects in Brazil is 28.75%. Assume the parity conditions hold. The current spot rate is 6.2775M$/R$. What is the net present value of the project from the parent and project perspective? Should they accept the project? Show all the necessary calculations to compute the NPV from BOTH the parent and project perspective. -50,000,000 R$ 65,000,000 R$ 50,000,000 R$ 40,000,000 R$ 0 1 2 3