Melinda Deane, a new analyst at Hermosa and a recent MBA graduate, believes that it is a fundamental error to evaluate the Argentine project's prospective earnings and cash flows in dollars, rather than first estimating their Argentine peso $($Ps$)$ value and then converting cash flow returns to the United States in dollars. She believes the correct method is to use the end$-$of$-$year spot rate in $2012$ of Ps$3\mathrm{.}50=$ $$1\mathrm{.}00$ and assume it will change in relation to purchasing power. $($She is assuming U$.$S$.$ inflation to be $1\%$ per annum and Argentine inflation to be $5\%$ per annum.$)$ She also believes that Hermosa should use a risk$-$adjusted discount rate in Argentina which reflects Argentine capital costs $(20\%$ is her estimate$)$ and a risk$-$adjusted discount rate for the parent viewpoint capital budget $(18\%)$ on the assumption that international projects in a risky currency environment should require a higher expected return than other lower$-$risk projects. How do these assumptions and changes

alter Hermosa's perspective on the proposed investment?

$($Please provide excel formulas$)$