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?