Question

Suppose: S₀ =10MXN/$ iᵤₛ =5% and iₘₑₓᵢₒ =3% Under the rates above, $1000 converted to pesos and invested in Mexico would be worth how many pesos in a year? MXN 10,300

Answer 1

The value of $1000 converted to pesos and invested in Mexico after one year would be 10,300 MXN.

Step-by-step explanation:

To calculate the value of $1000 converted to pesos and invested in Mexico after one year, we need to consider the exchange rate and the interest rates. Given that S₀ = 10 MXN/$, iᵤₛ = 5%, and iₘₑₓᵢₒ = 3%, we can follow these steps:

1. Convert $1000 to pesos: $1000 x 10 MXN/$ = 10,000 MXN
2. Calculate the interest earned: 10,000 MXN x 3% = 300 MXN
3. Add the interest to the initial investment: 10,000 MXN + 300 MXN = 10,300 MXN

Therefore, $1000 converted to pesos and invested in Mexico would be worth 10,300 pesos after one year.