Presuppose, we invest in a 30 year factory in Mexico producing silver bracelets each of which selling for about $1,000, How would the NPV of a project, we have in Mexico, be affected, if the dollari revalued against the peso by 15% yearly?

Case 1. Presuppose that nothing else changes except the exchange rate, i.e., the peso devaluation.

Case 2. Presuppose the volume of sales in the US are triple what they are in Mexico in the beginning. Also, presuppose the price elasticity of demand is -4 for the product in the US.