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