I need your help in preparing a study to localize our luxury product Alpha to the country of Rica. Rica's currency

(abbreviated RIC) has weakened considerably in the past year against the U.S. dollar (USD) causing the profit

translation of our revenue from our Rica sold units to degrade significantly. The leadership team has requested

that we find a way to mitigate this currency volatility. One way we can is better match the currency of our costs to the currency of our revenue. As our sales in Rica constitute a larger mix of the total global sales of our

multi-vehicle portfolio going forward, localizing Alpha and creating some RIC cost exposure may help balance our

overall currency portfolio and minimize the profit impact of volatile currency movements.

See the note below for additional texture and key financial data that will be required for the analysis.

Your analysis should provide a profit impact sensitivity analysis using the range of RIC:USD provided below.

Here are my guidelines / tips for you:

1. Your profit impact analysis should focus on a decision analysis for the localization alternative. The U.S. sourcing

location is in our present Business Plan. Provide an incremental view to our Business Plan shown in $ Millions.

2. The localization alternative will have no impact on our sales revenue, so all the data that I have sent over is cost

related. There is no need to include revenue in the incremental decision analysis.

3. Given the tight timing on this request, assume a One Period Analysis for this study (i.e., calculate the profit impact

for one year only). At a later date, with better data and an aligned cost of capital, we will analyze the entire five year

product cycle.

4. Bryan from the Corporate Economics team suggested that we study a three-point range for RIC:USD (5:1, 6:1, and

7:1).

As you will see, there are trade-offs with the localization alternative. Let me know your recommendation based on

the available data. And let me know other risks or concerns (financial and non-financial) that we should

communicate to our leadership team.

If you need any more data from my team, just let me know. Thanks for your help on this one.

Jess Wanderlust

Manager - New Model Programs

E-Mail Between Seymore Dinero & Jess Wanderlust

From: Seymore Dinero

To: Jess Wanderlust

Subject: Localization of Our Products

Date: July 20, 2019

Jess,

As a follow-up to our discussion, here is the necessary data to complete the localization study requested by the

leadership team prior to the next Board Meeting.

U.S. Source (reflects our present Business Plan):

Investment - $600 Million for re-tooling an existing facility where the new vehicle will be produced

Contribution Costs - All shown in USD

Rica Source:

Investment - $1.0 Billion will enable us to build a new facility where the new vehicle will be produced

Contribution Cost - All costs sourced in RIC. Data shown has been converted using the noted exchange rate as

assumed in our latest business plan

Manufacturing Source U.S. Rica

Sales Location U.S Rica U.S Rica

Annual Sales (Units) 55,000 45,000 55,000 45,000

Investment (Mils) $600 N/A N/A $1,000

Contribution Cost Impact (Per Unit)

Material Cost $(20,500.00) $(20,000.00) $(18,500.00) $(18,000.00)

Freight $(1,000.00) $(2,500.00) $(2,500.00) $(1,000.00)

Variable Labor $(1,600.00) $(1,600.00) $(800.00) $(800.00)

Duty & Tax $(100.00) $(10,000.00) $(800.00) $(3,000.00)

Total Contribution Margin Impact $(23,200.00) $(34,100.00) $(22,600.00) $(22,800.00)

Exchange Rate N/A N/A 6 6.0 a/

Exchange Rate (RIC:USD) N/A N/A 6.0 a/ 6.0 a/

_ _ _ _ _

Note: All costs shown are in USD. Exchange rate used to convert Rica based costs to USD is shown.

a/ All costs (incl. investment) in Rica localization scenario are sourced in RIC

U.S. Rica