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Question: A U.S. based company can make an immediate investment of $20 million in Mexico. The current exchange rate between the Mexican peso (MXN) and the U.S. dollar is MXN 18.00/$. The net cash flows inflows the company expects to realize from the investment and the expected exchange rates when they occur are listed in the table below:

Year	Cash Flow	Exchange Rate
1	MXN 250.0 mil	MXN 20.0
2	MXN 300.0 mil	MXN 24.0

The company requires a 10% rate of return on this investment. What is the U.S. dollar net present value (NPV) of the project?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92642564

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