You work in your governments central bank and are advising your countrys leaders about its financial decisions.

Part A: In the table below, put your countrys U.S. dollar exchange rate and use the appropriate exchange rate to compute the value of $10,000,000 in your countrys currency.

Government bond interest rates	Your Country / U.S. dollar Exchange rate	The value of $10,000,000 in your countrys currency
Todays rates
Rates one year ago

Part B: One year ago, your government borrowed by selling two bonds: A $10,000,000 U.S. dollar denominated bond with a coupon rate of 6.00% (your countrys government received $10,000,000 one year ago and must pay $10,000,000 plus $600,000 in interest today)

AND A bond denominated in your countrys currency with an amount in the shaded box in the table above (the value of $10,000,000 in your countrys currency) and a coupon rate also denominated in your countrys currency of 8.00%.

Your country used the borrowed money from both bonds to build a new water plant. It will pay back both bonds by using your countrys currency (converting the currency to dollars).

Compute how much your countrys government needs in your countrys currency to repay each of the two bonds today. SHOW ALL WORK

Part C: Did the exchange rate change help or hurt the ability for the government to pay back the bond? Show all work.

Exchange Rate Today = 1MXP = $0.049

Exchange Rate one year ago = 1MXP = $0.0501

Country Selected for all three part is Mexico.