INTRODUCTION It is April 2011 and you have used your newly acquired business degree to secure a management job as advisor to [he chief financial officer with Caribbean Brewers Inc., located in Antigua in the Caribbean Sea. Caribbean Brewers Inc. is a 75%-owned subsidiary of Gera International, a conglomerate in the business of brewing and distributing beer. It is barely a week since you started your job and you already have major projects to deal with. GERA INTERNATIONAL Gera beer has been a well-established international brand of beer for over half a century, usually ranked among the top three selling brands of beer in the world. Up until 2005, Gera International, head-quartered in Munich, Germany, brewed Gera beer for the Caribbean region at a brewery located in Jamaica. As transportation costs continued to increase, Che logistics of shipping from Jamaica, which is located in [he western Caribbean, to islands in the eastern Caribbean became problematic. In the early 2000s, Gera International set out to find a suitable location for a plant in Che eastern Caribbean. After due diligence investigations on a number of locations, Gera International decided on Antigua. Antigua, with the population of is the largest of the English-speaking Leeward Islands of the eastern Caribbean. Antigua became Great Britail* most important Caribbean base when Admiral Horatio Nelson sailed there in 1784. Situated in the middle of the eastern Caribbean chain of Islands, Antigua often serves as a business and transportation hub between the Windward Islands of SL Lucia, Grenada, Dominica, and St. Vincent and the Leeward Islands of St. Kitts, SL Marcin, Montserrat, and Anguilla. It is also in reasonable physical proximity to the more populated islands of Puerto Rico and Dominican Republic to che north and Barbados and Trinidad to the south. Antigua already had a successful brewery that produced "ligua beer, a popular brand in Antigua and throughout the eastern Caribbean. In 2000, the Antiguan brewery had negotiated a 15-year income tax holiday with the government of Antigua on income earned from sales of "I"lgua beer. The combination of the central location of Antigua in the eastern Caribbean, the success of the "ligua beer line, and the tax concession on "Iigua beer made Antigua a good choice for Gera International; it purchased 75% of the Antiguan brewery, Caribbean Brewers Inc., in 2005. The remaining of the common shares of Caribbean Brewers remained held by senior management and other employees. Caribbean Brewers is one of the many subsidiaries of varying sizes under Gera International's control. The production facilities of Caribbean Brewers were expanded in 2008, thereby effectively doubling the productive capacity This expansion was funded through a 10-year amortized loan from Gera International at a fixed interest rate of 10%. All of the production of Gera beer for Khe eastern Caribbean region was transferred to Caribbean Brewers after the plant expansion. The resulting production figures for Caribbean Brewers are provided in Figure I.