(solution) You are the CFO of a U.S. firm whose wholly owned subsidiary in

(solution) You are the CFO of a U.S. firm whose wholly owned subsidiary in

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

Depreciation is a reduction in the value of an asset with the passage of time caused by wear and
tear. Prediction by analyst that peso would depreciate by 30%, it would mean that all the assets…