Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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 traded on the NASDAQ. Americo currently has 657,000 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.) Business Performance (000s) Earnings before taxes (EBT) Corporate income tax rate Average exchange rate for the period U.S. Parent (US$) $4,560 21% Brazilian Subsidiary (R$) R$6.200 25% R$1.7398/$ German Subsidiary (9) 4.510 40% 0.779/$ Chinese Subsidiary (V) V2,500 30% 7.8059/5 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 swinas in value against most of the world's currencies in recent vears. b. What would be the impact on Americo's consolidated EPS if all foreign currencies were to appreciate 19% against the U.S. dollar? c. What would be the impact on Americo's consolidated EPS if all foreign currencies were to depreciate 19% against the U.S. dollar? a. After deducting taxes each country, what are Americo's consolidated earnings and consolidated earnings per share in U.S. dollars? Calculate the business performance per country below: (Round to two decimal places. Round exchange rates to four decimal places.) U.S. Parent Business Performance (000s) Company Earnings before taxes (local currency) $ Less corporate income taxes $ Net profits of individual subsidiary $ Avg exchange rate for the period (fc/$) Net profits of individual subsidiary $ Enter any number in the edit fields and then click Check

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Focus On Personal Finance

Authors: Jack Kapoor, Les Dlabay, Robert Hughes

3rd Edition

0073382426, 9780073382425

More Books

Students also viewed these Finance questions

Question

What would you do?

Answered: 1 week ago