Question
TailorJohnson, a U.S. maker of finemenswear, has a subsidiary in Ethiopia. Thisyear, the subsidiary reported and repatriated earnings before interest and taxes(EBIT) of 185 million
TailorJohnson, a U.S. maker of finemenswear, has a subsidiary in Ethiopia. Thisyear, the subsidiary reported and repatriated earnings before interest and taxes(EBIT) of 185 million Ethiopian birrs. The current exchange rate is 8.5583 birrs/dollar or Upper S = $ 0.1168/ birr. The Ethiopian tax rate on this activity is 24 % U.S. tax law requires Tailor Johnson to pay taxes on the Ethiopian earnings at the same rate as on profits earned in the UnitedStates, which is currently 45 %. However, the United States gives a full tax credit for foreign taxes paid up to the amount of the U.S. tax liability. What is TailorJohnson's U.S. tax liability on its Ethiopiansubsidiary?
TailorJohnson's U.S. tax liability on its Ethiopian subsidiary is $_____ million. (Round to two decimalplaces.)
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