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frozen [14]
3 years ago
11

A US investor is considering investing in Mexico. The exchange rate today is $1 US buys 7.5 Pesos, the Mexican interest rate is

12%, and the investor expects that the future exchange rate will be $1 US buys 6.5 Pesos. Then what is the future value of a $100 investment, in US dollars?
Business
1 answer:
miv72 [106K]3 years ago
3 0

Answer:

The future value of the investment in a year will be 129.23 dollars

Explanation:

We will convert the US dollars to Mexican Pesos

100 x 7.5 = 750

Then, we will apply the interest rate:

Principal (1+r) = Amount

750 x (1 + 0.12) = Amount

750 x 1.12 = 840

Now we convert the future value of the investment at the expected rate:

1 dollar = 6.5 pesos

We got 840 pesos

840/ 6.5 = 129,23 dollars

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Answer:

The correct answer is $24,500.

Explanation:

According to the scenario, the given data are as follows:

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3 years ago
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If labor in Mexico is less productive than labor in the united states in all areas of production then both Mexico and us still can benefit from trade.

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6 0
1 year ago
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Hence to calculate the public debt of Eastland, we add the amount of debts owed by citizens of Eastland + Amount of debts owed by foreign citizens in Eastland .

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