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Scenario Analysis

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1. You are the CFO of a U.S. firm whose wholly owned subsidiary in Mexico manufactures component parts for your U.S. assembly operations. The subsidiary has been financed by bank borrowings in the United States. One of your analysts told you that the Mexican peso is expected to depreciate by 30 percent against the dollar on the foreign exchange markets over the next year. What actions, if any, should you take? 2. Scenario 1 An aircraft repairman is looking for ways to cut costs. He’s heard that the alternators used in piston-powered general aviation aircraft are identical to automotive ones, except for the data plate and price, with the aircraft ones costing about four times as much as the automotive. The mechanic picks up a used automotive alternator cheap from a junkyard, cleans it up and paints it, fabricates and attaches a reasonable facsimile of an aircraft alternator data plate, and installs the alternator on a customer’s aircraft, charging the customer the price of a new aircraft alternator. • Has he committed any crimes? • If so, and the aircraft crashes as a result of the alternator failing while flying in clouds, killing the owner-pilot, what are the possible penalties the repairman could face? 3. Scenario 3 You are a pilot for a U.S. airline whose pilots are not represented by a union or working under a collective bargaining agreement. As a cost-saving measure, airline management decides to drop the pilots’ health insurance benefit. • Can the company legally impose this change immediately and unilaterally, or is it required to first follow some specified procedure? • Explain. 4. Scenario 4 You are an avionics technician employed by an airline, all of whose maintenance personnel are represented by a union and working under a union contract with the company. You dislike unions, don’t want to be a member of the union or to have to pay union dues, and don’t want the union representing your interests. • Can you opt out and cut your own deal with management? • Explain.

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