9. Luzon's Earnings and the Fall of the Dollar. The U.S. dollar has experienced significant swings in value against most of the world's currencies in recent years.

a. What would be the impact on Luzon's consoli- dated EPS if all foreign currencies were to appre- ciate 20% against the U.S. dollar?

b. What would be the impact on Luzon's consoli- dated EPS if all foreign currencies were to depre- ciate 20% against the U.S. dollar? Note: Calculate the percentage changes by dividing the initial currency value by (1+ the percentage change) to calculate the new currency value. Luzon is a U.S.-based multinational manufacturing firm, with wholly owned subsidiaries in Brazil, Germany, and China, in addition to domestic operations in the United States. Luzon is traded on the NASDAQ. Luzon currently has 650,000 shares outstanding. The basic operating char- acteristics of the various business units is as follows: 

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(ooos, local USA Brazil Germany China currency) (dollars, $) (reais, R$) (euros, e) (yuan, Y) Earnings before tax $4,500 R$6,250 4,500 2,500 (EBT) Corporate income tax 35% 25% 40% 30% rate Average exchange rate for period R$180/$ 0.7018/$ 7750/5