Business Finance Homework Help

4.10  Suppose annual inflation
rates in the U.S. and Mexico are expected to be 6% and 80%, respectively, over the next several years. If
the current spot rate for the Mexican peso is $.005, then the best estimate of
the peso’s spot value in 3 years is

a)  $.00276

b)  $.01190

c)  $.00321

d)  $.00102