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Dela Soul, GASA's new CEO, asks you for help analyzing yet another investment project for Ariel-Mexico. You are trying to render a decision on the

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Dela Soul, GASA's new CEO, asks you for help analyzing yet another investment project for Ariel-Mexico. You are trying to render a decision on the project. You and Dela have collected the following information: Expected FCFs: Year: 2021 2022 2023 -2200 FCFs (thousands of pesos): 1200 1500 13% Mexican government bond rate 8% Groupe Ariel cost of capital 3% French inflation rate 12% Mexican inflation rate 12.00 Current spot rate (MXN/C) Suppose Dela reports that Groupe Ariel HQ -- due to some purchased research -- expects the peso to actually rapidly appreciate in value, rather than depreciate as one might expect if RPPP were to hold. i. How might this affect the perceived attractiveness of this project from the standpoint of managers in France and in Mexico? Will they agree on the NPV? Explain. ii. Propose a possible, legitimate reason or situation that might support GASA's expectation of an appreciating peso vs the euro. That is what information in the purchased research could lead GASA to expect a violation of RPPP

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