An American firm is evaluating an investment in Mexico. The project costs $400$ million pesos, and it is expected to produce an income

of $200$ million pesos a year in real terms for each of the next $3$ years. The expected inflation rate in Mexico is $5\%$ a year, and the firm

estimates that an appropriate discount rate for the project would be about $7\%$ above the risk$-$free rate of interest.

Calculate the net present value of the project in U$.$S$.$ dollars. Exchange rates are given in Table $22\mathrm{.}1.$ The interest rate is about $5\mathrm{.}5\%$ in

Mexico and $1\mathrm{.}0\%$ in the United States.

Note: Do not round intermediate calculations. Enter your answer in thousands rounded to $2$ decimal places.

TABLE $22\mathrm{.}1$ Exchange rates, July $2020.$

Country Currency Symbol Abbreviation Exchange Rate

Europe

Eurozone Euro$*$ EUR $1\mathrm{.}1595$

Czech Republic Koruna K$$ CZK $22\mathrm{.}8420$

Russia Ruble $$ RUB $70\mathrm{.}7987$

Sweden Krona kr SEK $8\mathrm{.}8655$

Switzerland Franc fr CHF $0\mathrm{.}9298$

United Kingdom Pound$*$ GBP $1\mathrm{.}2714$

Americas

Brazil Real R$ BRL $5\mathrm{.}1101$

Canada Dollar $ CAD $1\mathrm{.}3416$

Mexico Peso N$ MXN $22\mathrm{.}2949$

Pacific$/$Middle East$/$Africa

Australia Dollar$*$ $ AUD $0\mathrm{.}7151$

China Yuan $$ CNY $6\mathrm{.}9955$

India Rupee $$ INR $74\mathrm{.}6035$

Japan Yen $$ JPY $107\mathrm{.}19$

New Zealand Dollar$*$ $ NZD $0\mathrm{.}6670$

South Africa Rand R ZAR $16\mathrm{.}3958$

South Korea Won $$ KRW $1,196\mathrm{.}03$

Turkey Lira $$ TRY $6\mathrm{.}8523$

$*$ For currencies marked with an asterisk, the U$.$S$.$ dollar is the quote currency. In all other cases, the U$.$S$.$ dollar is the base currency.