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 655,000 shares outstanding. The basic operating characteristics of the various business units is as follows: (Click on the e 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 (USS) $4,600 35% Brazilian Subsidiary (R$) R$6,210 25% R$ 1.809/$ German Subsidiary () 4,410 40% 0.6691/5 Chinese Subsidiary () 2,530 30% 7.8494/5 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? 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$3.0792/S, earnings before taxes in Brazil fell as a result of the recession to R$5,810,000? 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 655,000 shares outstanding. The basic operating characteristics of the various business units is as follows: (Click on the e 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 (USS) $4,600 35% Brazilian Subsidiary (R$) R$6,210 25% R$ 1.809/$ German Subsidiary () 4,410 40% 0.6691/5 Chinese Subsidiary () 2,530 30% 7.8494/5 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? 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$3.0792/S, earnings before taxes in Brazil fell as a result of the recession to R$5,810,000
