b. What would be the impact on Americo's consolidated EPS if all foreign currencies were to appreciate
22%
against the U.S. dollar?
c. What would be the impact on Americo's consolidated EPS if all foreign currencies were to depreciate
22%
against the U.S. dollar?
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 641,000 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.) Chinese Subsidiary U.S. Parent (USS) $4,550 Business Performance (000s) Earnings before taxes (EBT) Corporate income tax rate Average exchange rate for the period Brazilian Subsidiary (R$) R$6,340 25% R$ 1.8795/$ German Subsidiary () 4,520 40% 0.7739/$ 35% 2,420 30% 7.7563/$ Net profits of individual subsidiary $ 2,957.50 R$ 4,755.00 2,712.00 W 1,694.00 1.8795 0.7739 Avg exchange rate for the period (fc/$) Net profits of individual subsidiary 7.7563 218.40 $ 2,957.50 $ 2,529.93 $ 3,504.33 $ Enter any number in the edit fields and then click Check Answer. II Earnings before taxes (EBT) Corporate income tax rate Average exchange rate for the period $4,550 35% R$6,340 25% R$1.8795/5 4,520 40% 0.7739/$ 2,420 30% 7.7563/$ 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 22% against the U.S. dollar? c. What would be the impact on Americo's consolidated EPS if all foreign currencies were to depreciate 22% against the U.S. dollar? Net profits of individual subsidiary $ 2,957.50 R$ 4,755.00 2,712.00 1,694.00 1.8795 0.7739 Avg exchange rate for the period (fc/$) Net profits of individual subsidiary 7.7563 218.40 $ 2,957.50 $ 2,529.93 $ 3,504.33 $ Enter any number in the edit fields and then click Check
