Exports by the soft-drink manufacturer Ecsy-Cola Corporation have risen to the point that it is considering establishing a small manufacturing and sales operation overseas in Ruritania.The current spot rate is 100 pesos per dollar. The interest rate in the United States is 3%. Ecsy's financial manager estimates that the company requires an additional expected return of 10% to compensate for the risk of the project, so the opportunity cost of capital for the project is 3 + 10 = 13%. Suppose Ecsy-Cola's Ruritanian facility is expected to generate the following cash flows in Ruritanian pesos.

Suppose that you do use your own views about exchange rates when valuing an overseas investment proposal. Specifically, suppose that you believe that the peso will depreciate by 2% per year. Recalculate the NPV of Ecsy's project.