Americo's EPS Sensitivity to Exchange Rates (B). 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

659,000

shares outstanding. The basic operating characteristics of the various business units is as follows:(Click on

the

icon to import the table into a spreadsheet.)

Business Performance (000s)	U.S. Parent (US$)	Brazilian Subsidiary (R$)	German Subsidiary ()	Chinese Subsidiary ()
Earnings before taxes (EBT)	$4,500	R$6,220	4,500	2,400
Corporate income tax rate	35%	25%	40%	30%
Average exchange rate for the period		R$1.8796/$	0.6525/$	7.7508/$

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?

b. Assume a major political crisis wracks Brazil, first affecting the value of the Brazilian reais and, subsequently, inducing an economic recession within the country. What would be the impact on Americo's consolidated EPS if the Brazilian reais were to fall in value to

R$2.931/$,

earnings before taxes in Brazil fell as a result of the recession to

R$5,770,000?