The Rhatigan Company, based in Wichita, Kansas, is considering making its first foreign expansion. It is considering a project in Mexico with an initial startup cost of 100 million pesos. Rhatigan expects cash flows from the project of 35 million pesos per year for three years and a salvage value in three years of 40 million pesos. The current spot exchange rate is $0.10, and Rhatigan anticipates the future exchanges rates will be $0.11 in one year, $0.12 in two years and $0.125 in three years. Rhatigan's risk-adjusted discount rate for this project is 15%. 

What is the NPV of this project, and should the company accept it?

Answer rating: 100% (QA)

To calculate the NPV of the project we need to convert all cash flows to USD using the forecasted ex... View the full answer