Answered step by step
Verified Expert Solution
Question
1 Approved Answer
C. What would be the impact on Americo's consolidated EPS if all foreign currencies were to depreciate 18% against the U.S. dollar? Americo's Earnings and
C. What would be the impact on Americo's consolidated EPS if all foreign currencies were to depreciate 18% 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 659,000 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$) $4,420 21% Brazilian Subsidiary (R$) R$6,320 25% R$ 1.8546/5 German Subsidiary () 4,400 40% 0.77/$ Chinese Subsidiary (Y) 2,480 30% 7.7711/$ 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? a. After deducting taxes in 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 Company $ Business Performance (000s) Earnings before taxes (local currency) Less corporate income taxes Net profits of individual subsidiary $ $ Avg exchange rate the riod (fc/$) Net profits of individual subsidiary Enter any number in the edit fields and then click CheckStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started