TailorJohnson, a U.S. maker of finemenswear, has a subsidiary in Ethiopia. Thisyear, the subsidiary reported and repatriated
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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 278 million Ethiopian birrs. Assume the current exchange rate is 8.7022 birr/dollar or S1=$0.1149/birr. The Ethiopian tax rate on this activity is 24 %. Tax law in the United States requires Tailor Johnson to pay taxes on the Ethiopian earnings at the same rate as on profits earned in the UnitedStates, which is currently 40 %. 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? (Round to three decimal places)
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