What is the NPV of this project to the Mexican subsidiary

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Question - XYZ Corp, a US firm, is holding a music festival in Mexico. The festival will cost MXN 107M to be set up today, half of which will be paid by their Mexican subsidiary, and half of which will be paid by the XYZ parent company. One year from today, the music festival will produce cash flows of MXN 204M, half of which will go to XYZ, and half of which will be kept by the local subsidiary. The spot rate today is MXN 20.9 per USD, and the 1 year forward rate is MXN 17.6 per USD. XYZ's USD cost of capital for foreign projects is 17.7%, and the local subsidiary's peso cost of capital is 11.5%. You may ignore taxes for the purpose of this question. What is the NPV of this project to the Mexican subsidiary? Please give your answer to the nearest peso.

Reference no: EM132960353

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