This case study examines Groupe Ariel S.A.'s cross-border investment in a Mexican plant, focusing on the purchase of automated machinery for recycling and remanufacturing toner cartridges. The analysis involves calculating the Net Present Value (NPV) of the investment in both Mexican pesos and Euros, considering different inflation scenarios and exchange rate effects. The study explores how inflation rates in Mexico and France impact the NPV and the decision-making process. It delves into the International Fisher Effect and its implications on real purchasing power parity. The case highlights the importance of considering parity conditions in cross-border operations, especially concerning currency fluctuations, to make informed financial decisions. The study also assesses the project's potential return and its viability in a mature market, taking into account after-sales service revenue and potential risks.
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