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Multinational firms, differing risk, comparison of profit, ROI, and RI. Newmann, Inc. has divisions in the United States, France, and Australia. The U.S. division is the oldest and most established of the three and has a cost of capital of 6%. The French division was started four years ago when the exchange rate for the Euro was 1 Euro = $1.34 USD. The French division has a cost of capital of 8%. The division in Australia was started this year, when the exchange rate was 1 Australian Dollar (AUD) = $0.87 USD. Its cost of capi- tal is 11%. Average exchange rates for the current year are 1 euro = $1.07 and 1 AUD = $0.74 USD. Other information for the three divisions includes: United States France Australia Long-term assets Operating revenues Operating expenses $22,048,000 $31,826,170 $26,738,330 8,798,851 AUD 4,509,628 AUD 11,422,761 euros 7,023,860 euros 4,980,290 euros 8,216,892 AUD Income-tax rate 35% 30% 20%

Multinational firms, differing risk, comparison of profit, ROI, and RI. Newmann, Inc. has divisions in the United States, France, and Australia. The U.S. division is the oldest and most established of the three and has a cost of capital of 6%. The French division was started four years ago when the exchange rate for the Euro was 1 Euro = $1.34 USD. The French division has a cost of capital of 8%. The division in Australia was started this year, when the exchange rate was 1 Australian Dollar (AUD) = $0.87 USD. Its cost of capi- tal is 11%. Average exchange rates for the current year are 1 euro = $1.07 and 1 AUD = $0.74 USD. Other information for the three divisions includes: United States France Australia Long-term assets Operating revenues Operating expenses $22,048,000 $31,826,170 $26,738,330 8,798,851 AUD 4,509,628 AUD 11,422,761 euros 7,023,860 euros 4,980,290 euros 8,216,892 AUD Income-tax rate 35% 30% 20%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Use after-tax operating income and the individual cost of capital of each division to calculate residual income and compare.

Multinational firms, differing risk, comparison of profit, ROI, and RI. Newmann, Inc. has divisions in the United States, France, and Australia. The U.S. division is the oldest and most established of the three and has a cost of capital of 6%. The French division was started four years ago when the exchange rate for the Euro was 1 Euro = $1.34 USD. The French division has a cost of capital of 8%. The division in Australia was started this year, when the exchange rate was 1 Australian Dollar (AUD) = $0.87 USD. Its cost of capi- tal is 11%. Average exchange rates for the current year are 1 euro = $1.07 and 1 AUD = $0.74 USD. Other information for the three divisions includes: United States France Australia Long-term assets Operating revenues Operating expenses $22,048,000 $31,826,170 $26,738,330 8,798,851 AUD 4,509,628 AUD 11,422,761 euros 7,023,860 euros 4,980,290 euros 8,216,892 AUD Income-tax rate 35% 30% 20%
Transcribed Image Text:Multinational firms, differing risk, comparison of profit, ROI, and RI. Newmann, Inc. has divisions in the United States, France, and Australia. The U.S. division is the oldest and most established of the three and has a cost of capital of 6%. The French division was started four years ago when the exchange rate for the Euro was 1 Euro = $1.34 USD. The French division has a cost of capital of 8%. The division in Australia was started this year, when the exchange rate was 1 Australian Dollar (AUD) = $0.87 USD. Its cost of capi- tal is 11%. Average exchange rates for the current year are 1 euro = $1.07 and 1 AUD = $0.74 USD. Other information for the three divisions includes: United States France Australia Long-term assets Operating revenues Operating expenses $22,048,000 $31,826,170 $26,738,330 8,798,851 AUD 4,509,628 AUD 11,422,761 euros 7,023,860 euros 4,980,290 euros 8,216,892 AUD Income-tax rate 35% 30% 20%
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