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What is the total amount of pesos she has to save today

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Serena lives in Buenos Aires and is planning to visit the Machu Picchu in Peru for her summer vacation. The trip will take place in 3 months and is expected to cost 30,000 Peruvian New Sol. The current exchange rate between the dollar and the peso is 7.80 ARS/USD whereas the exchange rate between the dollar and the sol is 2.76 PEN/USD. Note that USD is the base currency for both exchange rates. Inflation is expected to hit 30% on annual basis in Argentina, 5% on annual basis in Peru, and 2% on annual basis in US. The 3-month nominal interest rate in Argentina is 25% per annum, and she will use PPP to forecast future exchange rates. What is the total amount of pesos she has to save today to pay for her trip?

Reference no: EM132433987

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