8. Fort Collins, Inc. has $1 million in cash available for 30 days. It can earn 1% on a 30-day investment in the U.S. Alternatively, if it converts the dollars to Mexican pesos, it can earn 1 1/2% on a Mexican deposit. The spot rate of the Mexican peso is $.12, and the spot rate 30 days from now is expected to be $.10. Should Ft. Collins invest its cash in the U.S. or in Mexico? Support your answer.

8. Fort Collins, Inc. has $1 million in cash available for 30 days. It can earn 1% on a 30-day investment in the U.S. Alternatively, if it converts the dollars to Mexican pesos, it can earn 1 1/2% on a Mexican deposit. The spot rate of the Mexican peso is $.12, and the spot rate 30 days from now is expected to be $.10. Should Ft. Collins invest its cash in the U.S. or in Mexico? Support your answer.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter27: Multinational Financial Management

Section: Chapter Questions

Problem 14P

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