Investments in other entities need to be structured after considering all the relevant factors

before reaching a final decision.

In each of these independent cases below provide a recommendation to the management of

Fast Air as to the most appropriate investment strategy (subsidiary, associate or joint

operation).

As part of your answer, provide reasons for the recommendation as well as practical steps

that can be taken by Fast Air management during the planning phase to ensure your

recommended investment structure can be achieved. The 50/50 investment contributions by

Fast Air and Hydro Speed are fixed and cannot be changed.

Your response should consider all the background information of this case study and your

answer should be completed in the table provided on page 25.

.

Case One

Fast Air loan facility to due to be re-negotiated with the bank in the next 12 months. The bank

loan is an integral part of the financing of Fast Air's operations and is a main priority of the

management to ensure no issues arise during this re-negotiation of this loan facility.

Case Two

Fast Air is under significant pressure from both shareholders and market analysts to produce

good overall financial results. Currently there is not a lot of confidence in the market amongst

investors.