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Americo's Earnings and the Fall of the Dollar. Americo is a U.S.-based multinational manufacturing firm with wholly-owned subsidiaries in Brazil, Germany, and China, in addition
Americo's Earnings and the Fall of the Dollar. Americo 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. Americo is traded on the NASDAQ. Americo currently has 647,000 shares outstanding. The basic operating characteristics of the various business units are as follows: (Click on the icon to import the table into a spreadsheet.) . Chinese Subsidiary U.S. Parent (US$) $4,500 21% Business Performance (000s) Earnings before taxes (EBT) Corporate income tax rate Average exchange rate for the period Brazilian Subsidiary (R$) R$6,350 25% R$1.816/$ German Subsidiary () 4,550 40% 0.7058/$ Y2,450 30% 77.6944/$ Americo must pay corporate income tax in each country in which it currently has operations. a. After deducting taxes in each country, what are Americo's consolidated earnings and consolidated earnings per share in U.S. dollars? The dollar has experienced significant swings in value against most of the world's currencies in recent years. b. What would be the impact on Americo's consolidated EPS if all foreign currencies were to appreciate 18% against the U.S. dollar? c. What would be the impact on America's consolidated EPS if all foreign currencies were to depreciate 18% against the U.S. dollar
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