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An American firm is evaluating an investment in Mexico. The project costs 500 million pesos, and is expected to produce an income of 267,500 thousand
An American firm is evaluating an investment in Mexico. The project costs 500 million pesos, and is expected to produce an income of 267,500 thousand pesos the first year, 286,225 thousand pesos the second year, and 306,261 thousand pesos the third year. The expected inflation rate in Mexico is 8.9%, 3% in the US. The firm estimates that an appropriate discount rate for the project (WACC) would be 8% above the risk-free rate of interest (3%). The current Spot rate is: 11.2365 MP/$. Should this project be undertaken
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