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    Getu Delelu
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    This document summarizes the net present value (NPV) calculation for a 5-year cash flow stream in pesos with an exchange rate estimated using uncovered interest rate parity. The NPV is negative $243,553.24 based on a required return of 15%. Key inputs include annual cash flows of $2.25 million pesos, Mexican interest rate of 8%, and US risk-free rate of 4%.

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    This document summarizes the net present value (NPV) calculation for a 5-year cash flow stream in pesos with an exchange rate estimated using uncovered interest rate parity. The NPV is negative $243,553.24 based on a required return of 15%. Key inputs include annual cash flows of $2.25 million pesos, Mexican interest rate of 8%, and US risk-free rate of 4%.

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    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
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    3 views4 pages

    Worksheet in Financial Markets

    Uploaded by

    Getu Delelu
    This document summarizes the net present value (NPV) calculation for a 5-year cash flow stream in pesos with an exchange rate estimated using uncovered interest rate parity. The NPV is negative $243,553.24 based on a required return of 15%. Key inputs include annual cash flows of $2.25 million pesos, Mexican interest rate of 8%, and US risk-free rate of 4%.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 4

    Year Cash Flow (pesos) Exchange Rate

    0 -9,000,000 9.08
    1 2,250,000 9.44
    2 2,250,000 9.82
    3 2,250,000 10.21
    4 2,250,000 10.62
    5 2,250,000 11.05
    US Risk-Free Rate 4%
    Mexican Rate 8%
    Exchange rate estimated using the uncovered interes

    Required Return 15%

    NPV ($243,553.24)

    Year Cash Flow (pesos) discount


    0 -9000000 1
    1 2250000 0.840
    2 2250000 0.706
    3 2250000 0.593
    4 2250000 0.499
    5 2250000 0.419

    NPV

    PMT 2250000
    N 5
    r 19%

    PV annuity 1307138.91541
    6879678.50213
    NPV -2120321.49787
    -233515.583
    Cash Flow ($)
    -991,189 1 -991189.427
    238,267 0.86956522 207188.425
    229,103 0.75614367 173234.469
    220,291 0.65751623 144844.874
    211,818 0.57175325 121107.754
    203,671 0.49717674 101260.664
    NPV -243553.24

    overed interest parity condition.

    Cash Flow ($)


    -9000000
    1890756.30252
    1588870.84245
    1335185.58189
    1122004.69067
    942861.085
    -2120321.498
    -233515.583

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