Produce and sell automobile components

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Reference no: EM131558724

A U. S.- based firm, is considering a project in Mexico to produce and sell automobile components. It is a four- year project with an initial investment of USD 120,000. Each year, the project will produce 4,000 units of the product at a direct cost of MXN 150 and selling price of MXN 400. Indirect expenses, not including depreciation, are expected to be MXN 200,000. Depreciation is straight line to zero. Taxes are 32 percent. Calculate the NPV assuming an MXN discount rate of 15 percent. The current spot rate is MXNUSD = 0.08. Assume that salvage is zero and there is no working capital requirement.

Reference no: EM131558724

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