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1. ForCo, a corporation that is incorporated in a foreign country that does not have a treaty with the United States, plans to conduct manufacturing, marketing, and sales operations in the United States.  These U.S. operations produce $5 million of earnings & profits in Year 1.  Assume further that the U.S. operations will have a net worth of $17 million at the beginning of Year 1 and $20 million at the end of Year 1.  During Year 2, the U.S. branch does not produce any earnings & profits and its net worth is $20 million at the beginning of the year and $10 million at the end of the year.  For branch profits tax purposes in Year 1, the dividend equivalent amount (“DEA”) for the U.S. branch is as follows: a. $1.5 million. b. $2.0 million c. $10 million. $20 million. d. $25 million. 2. For branch profits tax purposes in Year 2, the DEA for the U.S. branch is as follows: a. $2 million. b. $3 million. c. $10 million. d. $20 million. e. $25 million.…

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Due to their rapid expansion to foreign markets the process is sometimes referred to as the “McDonaldization” of new markets. Which market entry strategy is McDonald’s Corporation using in those countries where local governments do not allow 100% foreign funded enterprises? a.Franchising b.Partnerships with local (domestic) companies c.Mergers & acquisitions d.Local holdings e.Direct export

4. P Company is a U.S. firm conducting a financial plan for the next year. It has no foreign subsidiaries, but more than half of its sales are from exports. Its foreign cash inflows to be received from exporting and cash outflows to be paid for imported supplies over the next year are disclosed below: Currency Total Inflow Canadian dollars (C$) C$ 35,000,000 German mark (DM) DM 5,500,000 French franc (FF) FF 15,000,000 Swiss franc (SF) SF 6,000,000 The spot rates and one-year forward rates as of today are: Currency Spot Rate $0.90 $0.62 $0.16 $0.65 Total Outflow C$ 2,500,000 DM 1,600,000 FF 12,000,000 SF 8,000,000 One Year Forward Rate C$ $0.95 DM $0.59 FF $0.14 SF $0.69 Based on the information provided, determine the net exposure of each foreign currency in dollar. [P.T.O.

13   XYZ Corporation is a U.S.-based corporation. It has decided to move some of its accounting operations abroad. The company will continue to use U.S. GAAP for external reporting purposes. Should the company insist that the employees located in the international locations follow the U.S.-based corporate culture? Explain?

56. Jensen Co. wants to establish a new subsidiary in Mexico that will sell computers to Mexican customers and remit earnings back to the U.S. parent. The value of this project will be favorably affected if the value of the peso ____ while it establishes the new subsidiary and ____ when the subsidiary starts operations. A. depreciates; appreciates B. appreciates; appreciates C. appreciates; depreciates D. depreciates; depreciates

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What areThe business risk impact and the accounts (as well as the related assertions) most likely affected by the events outlined in relation to Knights Ltd? Knights Ltd Wayne tells you he is planning the 30 June 2021 Audit of Knights Ltd, a company that produces and exports timber products to South East Asian countries. Knights contracts timber cutters to deliver set tonnages of logs to its mill throughout the year. The timber is then transported to Asia on charter vessels, which make an average of one trip a month. Timber is purchased in 50 hectare lots from plantations and state forests. In the past, 75% of timber was sourced from plantations, however this has fallen to 40% in the current year. The corresponding increase in timber sourced from state forests has angered environmental groups. Protests have been held in several forests, which has slowed production and frustrated the contractors, who are only paid once set tonnages of timber are delivered to the mill. These issues have…

Isolde Corporation, a manufacturer of land mines used in civil wars, has operations around the world. Consider the following events: Event A: The Company, in conformance with financial media reports, officially announced that it will skip an upcoming dividend payment due to liquidity issues. Event B: The Company officially announced the acquisition of a competitor based in Switzerland. The actual acquisition price was much lower than the market expected. Event C: The Company released its interim financial statements consistent with the forecasts in the financial media and other market reports; the quarterly performance was relatively weak. Which of the following market reactions, if true, will most likely render the market for Isolde's shares informationally efficient?   The market value of the company shares decreased substantially after Event A. The market value of the company shares decreased slightly after Event B. The market value of the company shares remained relatively…

Big Old Serious Supermarket (BOSS) is a retail company that manages a chain of supermarkets, operating solely in the US market. The company has issued common stock equity and bonds to finance its operations. Those are its only sources of capital. After the onset of the pandemic and its fallout on the economy, several changes occurred in the US economy and financial markets. What is the potential impact of each one of the following changes on the weighted average cost of capital (WACC) of BOSS? (assume that everything else remains constant.) i. The US Federal Reserve Bank lowered the reference interest rate. ii.The annual expected return for the S&P 500, the benchmark index for the US stock market, was revised downwards.

Suppose a U.S. firm builds a factory in China, staffs it with Chinese workers, uses materials supplied by Chinese companies, and finances the entire operation with a loan from a Chinese bank located in the same town as the factory. This firm is most likely trying to greatly reduce, or eliminate, which one of the following? Interest rate disparities   Short-run exposure to exchange rate risk   Long-run exposure to exchange rate risk   Political risk associated with the foreign operations   Translation exposure to exchange rate risk

A U.S. firm has a $10,000,000 investment in a foreign subsidiary, and the U.S. dollar is weakening against thecurrency of the country in which the foreign entity is located, which is also the subsidiary’s functional currency. Onthe basis of this information, one would expect the consolidated financial statements to show: Question 13Answer a. Stockholders’ equity increase from remeasurement adjustments b. Stockholders’ equity decrease from remeasurement adjustments c. Translation gains d. Translation losses