Americo's EPS Sensitivity to Exchange Rates (A). 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 647,000 shares outstanding. The basic operating characteristics of the various business units is 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$) $4,410 35% Brazilian Subsidiary (R$) R$6,310 25% R$1.8949/$ German Subsidiary (€) €4,510 40% €0.6203/$ a. After deducting taxes in each country, what are Americo's consolidated earnings and consolidated earnings per share in U.S. dollars? Chinese Subsidiary (¹) ¥2,450 30% ¥7.7456/$ 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? b. Assume a maior political crisis wracks Brazil. first affecting the value of the Brazilian reais and. subsequentlv. inducina an economic recession within the country. What would be the impact D
Americo's EPS Sensitivity to Exchange Rates (A). 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 647,000 shares outstanding. The basic operating characteristics of the various business units is 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$) $4,410 35% Brazilian Subsidiary (R$) R$6,310 25% R$1.8949/$ German Subsidiary (€) €4,510 40% €0.6203/$ a. After deducting taxes in each country, what are Americo's consolidated earnings and consolidated earnings per share in U.S. dollars? Chinese Subsidiary (¹) ¥2,450 30% ¥7.7456/$ 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? b. Assume a maior political crisis wracks Brazil. first affecting the value of the Brazilian reais and. subsequentlv. inducina an economic recession within the country. What would be the impact D
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Americo's EPS Sensitivity to Exchange Rates (A). 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 647,000 shares outstanding. The basic operating characteristics of the various business units is 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
Business Performance (000s)
Earnings before taxes (local currency)
Less corporate income taxes
Net profits of individual subsidiary
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.)
Avg exchange rate for the period (fc/$)
Net profits of individual subsidiary
The consolidated earnings per share is $
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?
b. Assume a maior political crisis wracks Brazil. first affecting the value of the Brazilian reais and. subsequentlv. inducing an economic recession within the country. What would be the impact
$
U.S. Parent
Company
U.S. Parent
(US$)
$4,410
35%
R$
R$
R$
Brazilian
Subsidiary
(Round to the nearest cent.)
Brazilian
Subsidiary
(R$)
R$6,310
25%
R$ 1.8949/$
€
German
Subsidiary
German
Subsidiary
(€)
€4,510
40%
€0.6203/$
Chinese
Subsidiary
Chinese
Subsidiary
(¥)
¥2,450
30%
¥7.7456/$
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