Pexi Inc., plans to construct a manufacturing plant in Mexico. This is expected to cost US$$100$ million. Pexi intends to leave the plant open for three years. During the three years of operation, cash flows are expected to be $518$ million Mexican pesos in Year $1,650$ million pesos in Year $2$ and $600$ million pesos in Year $3.$

At the end of the third year, the company expects to sell the plant for $700$ million pesos.

The current exchange rate is MXN$17\mathrm{.}19$ and the exchange rates over the life of the project are expected to fluctuate. Predict the exchange rates over the next three years $($come up with your own values$).$

The firm$$s cost of capital is $12\%.$

The required rate of return on this project is $16\%.$

All cash flows are remitted back to the parent at the end of each year.

$1.$ What is the amount of US dollars that will be remitted to the parent company each year?

$2.$ Which rate should be used to discount the cash flows?

$3.$ Calculate the present values of the remitted cash flows.

$4.$ What is the NPV of the project?

$5.$ Calculate the project$$s break$-$even salvage value

$6.$ Should the project be accepted?