Please provide a financial analysis for the alternative provided in below correspondence.

Also, a brief summary addressing the alternative strategies outlined in email.

Suggest an alternative and any additional information that assisted in the evaluation of the alternative

Question:

Prepare a study to localize a product. The currency is in Rico dollars which has weakened significantly in against the USD causing profit translation of our revenue from our Rica sold units to degrade significantly. The leadership team wants to find a way to mitigate this currency volatility. Please match the currency of costs to the currency of revenue. 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.

1.The profit impact analysis should focus on a decision analysis for the localization alternative. The U.S. sourcing location is in the present Business Plan. Provide an incremental view to our Business Plan shown in $ Millions.

2. The localization alternative will have no impact on 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). Also calculate the entire 5 year product cycle.

4. Bryan from the Corporate Economics team suggested a study of 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.

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 Luxury Motors Global Finance Team KEY DATA FOR VEHICLE FOOTPRINT STUDY Alpha Program - Launch Date January 2019 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) $ (20,000) $ (18,500) $ (18,000) Freight (1,000) (2,500) (2,500) (1,000) Variable Labor (1,600) (1,600) (800) (800) Duty & Tax (100) (10,000) 800 (3,000) Total Contribution Margin Impact $ (23,200) $ (34,100) $ (22,600) $ (22,800) 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