Solve the following problems (No need to show process, just results and answer to the question)

8) Assume Nikken Microsystems has sold Internet servers to Telecom Espaa for 685,000. Payment is due in four months and will be made with a trade acceptance from Telecom Espaa Acceptance. The acceptance fee is 1.3% per annum of the face amount of the note. This acceptance will be sold at a 3.7% per annum discount. Also assume that Nikken Microsystems prefers to receive U.S. dollars rather than euros for the trade transaction. It is considering two alternatives: 1) sell the acceptance for euros at once and convert the euros immediately to U.S. dollars at the spot rate of exchange of $1.02/ or 2) hold the euro acceptance until maturity but at the start sell the expected euro proceeds forward for dollars at the 4-month forward rate of $1.04/.

a. What are the U.S. dollar net proceeds received at once from the discounted trade acceptance in alternative 1?

b. What are the U.S. dollar net proceeds received in four months in alternative 2?

c. What is the break-even investment rate that would equalize the net U.S. dollar proceeds from both alternatives?

d. Which alternative should Nikken Microsystems choose?(NOTE: Assume a 360-day year.)

9) Motoguzzie exports large-engine motorcycles (greater than 700cc) to Australia and invoices its customers in U.S. dollars. Sydney Wholesale Imports has purchased $2,950,000 of merchandise from Motoguzzie, with payment due in

seven months. The payment will be made with a bankers' acceptance issued by Charter Bank of Sydney at a fee of 1.78%

per annum. Motoguzzie has a weighted average cost of capital of 10.5%. If Motoguzzie holds this acceptance to maturity, what is its annualized percentage all-in cost? (NOTE: Assume a 360-day year.)

10) Motoguzzie exports large-engine motorcycles (greater than 700cc) to Australia and invoices its customers in U.S. dollars. Sydney Wholesale Imports has purchased $2,900,000 of merchandise from Motoguzzie, with payment due in

five months. The payment will be made with a bankers' acceptance issued by Charter Bank of Sydney at a fee of 1.75%

per annum. Motoguzzie has a weighted average cost of capital of 9.4%. Bank of America is willing to buy Motoguzzie's bankers' acceptance for a discount of 6.1% per annum. What would be Motoguzzie's annualized percentage all-in cost of financing its $2,900,000 Australian receivable? (NOTE: Assume a 360-day year.)

11) Avon is a U.S.-based direct seller of a wide array of products. Avon markets leading beauty, fashion, and home products in more than 100 countries. As part of the training in its corporate treasury offices, it has its interns build a spreadsheet analysis of the following hypothetical subsidiary earnings/distribution analysis. Use the tax analysis presented in the popup window for your basic structure.

Baseline Values	Case 1		Case 2
a Foreign corporate income tax rate	28%		45%
b U.S. corporate income tax rate	36%		36%
c Foreign dividend withholding tax rate	15%		0%
d U.S. ownership in foreign firm	100%		100%
e Dividend payout rate of foreign firm	100%		100%
Foreign Subsidiary Tax Computation
1 Taxable income of foreign subsidiary	$3,300,000		$3,300,000
2 Foreign corporate income tax	(924,000)		(1,485,000)
3 Net income available for distribution	$2,376,000		$1,815,000
4 Retained earnings	0		0
5 Distributed earnings	2,376,000		1,815,000
6 Distribution to U.S. parent company	2,376,000		1,815,000
7 Withholding taxes on dividends	356,400		0
8 Net remittance to U.S. parent	$2,019,600		$1,815,000
U.S. Corporate Tax Computation on Foreign Income
9 Dividend received before withholding	$2,376,000		$1,815,000
10 Add back foreign deem-paid tax	924,000		1,485,000
11 Grossed-up foreign dividend	$3,300,000		$3,300,000
12 Tentative U.S. liability	1,188,000		1,188,000
13 Less credit for foreign taxes
a foreign income taxes paid	(924,000)		(1,485,000)
b foreign withholding taxes paid	(356,400)		(0)
c total	($1,280,400)		($1,485,000)
14 Additional U.S. taxes due	$0		$0
15 Excess foreign tax credits	92,400		297,000
16 After-tax income from foreign subsidiary	$2,112,000		$2,112,000

a. What is the total tax payment, foreign and domestic combined, for this income?

b. What is the effective tax rate paid on this income by the U.S.-based parent company?

c. What would be the total tax payment and effective tax rate if the foreign corporate tax rate was 42% and there were no withholding taxes on dividends?

d. What would be the total tax payment and effective tax rate if the income was earned by a branch of the U.S. corporation?

12) McDougan Associates, a U.S.-based investment partnership, borrows 75,000,000 at a time when the exchange rate is

$1.3366/. The entire principal is to be repaid in three years, and interest is 6.450% per annum, paid annually in euros. The euro is expected to depreciate vis--vis the dollar at 2.6% per annum. What is the effective cost of this loan forMcDougan?

Complete the following table to calculate the dollar cost of the euro-denominated debt for years 0 through 3. Enter a positive number for a cash inflow and negative for a cash outflow. (Round the amount to the nearest whole number and the exchange rate to four decimal places.)

		Year 0		Year 1		Year 2		Year 3
Proceeds from borrowing euros		75,000,000
Interest payment due in euros
Repayment of principal in year 3								(75,000,000)
Total cash flow of euro-denominated debt
Expected exchange rate, $/		1.3366
Dollar equivalent of euro-denominated cash flow	$		$		$		$