Use the following to solve questions 11 and 12:

Your company is looking at a new project in Mexico. The project will cost 8.5 million pesos. The cash flows are expected to be 2.05 million pesos per year for 4 years. The current spot exchange rate is 9.13 pesos per dollar. The risk-free rate in the US is 3% and the risk-free rate in Mexico is 6%. The dollar required return is 12%. (Use two decimal points in your calculations)

11- (2 points) What is the NPV of the project using the home currency approach?

1. -$289,955.57
2. -$294,684.82
3. -$393,147.56
4. -$397,261.39
5. None of the above

12- What is the NPV of the project using the foreign currency approach?

1. -$289,955.57
2. -$294,684.82
3. -$393,147.56
4. -$397,261.39
5. None of the above