A firm whose home currency is the Mexican Peso (MNX) is considering an investment in the United States. The 34investment is expected to produce after-tax United States dollar (USD) cash flows (in millions) as follows

Year 0:-USD350

Year 1: USD15

Year 2: USD162

Year 3: USD173

Year 4: USD184

The expected rates of inflation are constant at 7.55% in Mexico and 3.33% in the United States. The required returns for projects in this risk class are 18% in Mexico and 11% in the United States. The spot exchange rate is MNX20.81/USDThe project country's government has United States dollar-denominated bonds outstanding that currently yield 4.84% per annum. The Mexican firm pays a marginal corporate tax rate of 20% on its USD profits, which is the same marginal tax rate that your firm pays on its parent company profits in the Mexicar peso. The US Government has a FDI policy stipulating that for all foreign projects, the first 3 years of USD cash flows generated by the project must be loaned to the country's government at an interest rate of 0% per annum for a period of exactly 3 years after they are generated by the project. What is the NPV (in millions) of the project assuming there is no risk of blocked funds by the US Government?

a. USD165.22m

b. MXN3,438.26m

c. USD3.44m

d. MXN71.53m

e. None of the options in this question are correct.

What is the value of the side effect brought about by the blocked funds? a. -USD288.10m b. -MXN6,053.80m c. -MXN1.008.42m d. -USD116.76m e. None of the options in this question are correct.