EBK CORPORATE FINANCE
4th Edition
ISBN: 8220103164535
Author: DeMarzo
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 31, Problem 10P
a.
Summary Introduction
To determine: The
Introduction: The present value is an amount that an individual has to make as investment at present in order to generate the cash flow in the future. The present value of the cash flows can be computed by adding the cash flow of every stream.
b.
Summary Introduction
To determine: The exchange rate in 10 years that affects the actual amount of the U.S. tax liability and give the equation for the U.S. tax liability.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Brandy, a U.S. corporation, operates a manufacturing branch in Chad, which does not have an income tax treaty with the United States. Brandy’s world- wide Federal taxable income is $30,000,000; it is subject to a 21% marginal tax rate. Profits and taxes in Chad for the current year are summarized as follows. Compute Brandy’s foreign tax credit associated with its operations in Chad.
Indeco, a U.S. C corporation, operates Grange, a sales branch in Staccato. Indeco’s U.S. marginal income tax rate is 21%; it is 15% for Staccato. Grange’s pretax profit for the year is $1,000,000. There is no income tax treaty between the United States and Staccato. Staccato’s currency is the U.S. dollar. Com- pute Indeco’s combined U.S. and foreign income tax on the Grange profits under each of the following assumptions.
10. ABC Company is an operator of service equipments for overseas communications / calls. During the 3rd quarter of the year 2018, SAN JOSE, an international news services agency, made calls originating from Philippines to CANADA and paid to ABC the total gross payment for sale of services amounting to P 110,000, inclusive of all charges and taxes, if any. How much will be paid by ABC as percentage tax due for the 3rd quarter?
Chapter 31 Solutions
EBK CORPORATE FINANCE
Ch. 31.1 - Prob. 1CCCh. 31.1 - What implication do internationally integrated...Ch. 31.2 - Prob. 1CCCh. 31.2 - When do these two methods give the same NPV of the...Ch. 31.3 - Prob. 1CCCh. 31.3 - Prob. 2CCCh. 31.4 - Prob. 1CCCh. 31.4 - Prob. 2CCCh. 31.5 - What conditions cause the cash flows of a foreign...Ch. 31.5 - Prob. 2CC
Ch. 31 - You are a U.S. investor who is trying to calculate...Ch. 31 - Mia Caruso Enterprises, a U.S. manufacturer of...Ch. 31 - Etemadi Amalgamated, a U.S. manufacturing firm, is...Ch. 31 - Prob. 4PCh. 31 - You work for a U.S. firm, and your boss has asked...Ch. 31 - Prob. 6PCh. 31 - Prob. 7PCh. 31 - Prob. 8PCh. 31 - Prob. 9PCh. 31 - Prob. 10PCh. 31 - Prob. 11PCh. 31 - Prob. 12PCh. 31 - Assume that in the original Ityesi example in...
Knowledge Booster
Similar questions
- Indeco, a U.S. C corporation, operates Grange, a sales branch in Staccato. Indeco's U.S. marginal tax rate is 21%; it is 15% for Staccato. Grange's pre-tax profit for the year is $1,000,000. There is no income tax treaty between the United States and Staccato. Staccato's currency is the U.S. dollar. Compute Indeco's combined U.S. and foreign income tax on the Grange profits, under each of the following assumptions. If an amount is zero, enter "0". If required, use the minus sign to indicate a "refund".arrow_forwardNew America, Inc., a USA exporter of computer hardware intends to open a retail subsidiary in Kabul, Afghanistan sometime during tax year 2019. New America’s chief accountant has contacted our firm to inquire about income taxation for this planned business in Afghanistan and about the income tax obligations they might incur if they followed through with their plan. They also have asked to compare the Afghanistan tax rates and the rules governing ordinary and necessary business deductions to the respective US tax provisions. set up the memorandum. Conduct appropriate research and cite all relevant primary authority (tax code, regulations, etc.).arrow_forwardMidnight Motors is a US multinational firm. The manager of Midnight Motors is evaluating its international tax situation. In the US, Midnight Motors’ corporate tax rate is currently 26%. Midnight Motors has major operations in Argentina, Brazil, and China, and the tax rate is 13%, 41%, and 31%, respectively. Assume Midnight Motors' profits are fully and immediately repatriated. The foreign taxes paid for the current year are listed as follows: Argentina Brazil China Earnings before interest and taxes (EBIT) ($million) $490 $560 $630 Host country taxes paid $63.7 $229.6 $195.3 Earnings before interest after taxes $426.3 $330.4 $434.7 Midnight Motors' net US tax liability on its foreign earnings is closest to: $437 million $-52 million $0 million $489 millionarrow_forward
- Mr. Bayugan published his book abroad for the international market. During the first quarter, he earned a gross royalty of P1,000,000. How much final tax will be withheld by the foreign publisher?arrow_forwardDIY Sdn Bhd is a Malaysian tax resident company. DIY is involved in manufacturing bricks. DIY needs to know regarding sales tax implications in the manufacturing business. The company plans to import special high-grade stones and carry out a change in the nature and quality of the materials by glazing them before sale. DIY’s current sales is RM350,000 and is projected to be around RM400,000 for the next few years a(i) Explain whether DIY Sdn Bhd activities will fall within the scope of manufacturing activities for sales tax purposes. a(ii) Discuss on the sales tax registration requirement and advice whether DIY need to be registered.arrow_forwardFlint Steel Corporation has a precredit U.S. tax of $188,000 on $518,000 of taxable income in 2016. Flint has $218,000 of foreign source taxable income and paid $98,000 of income taxes to the German government on this income. All of the foreign source income is treated as general category income for foreign tax credit purposes. Flint's foreign tax credit on its 2016 tax return will be: A. $98,000 B. $37,560 C. $79,120 D. $120,000arrow_forward
- New Life is a multinational distribution company that started operating a Branch in Barbados on 1 January 2023. The company’s Head Office is in the Cayman Islands and is part of a group that earns more than USD 850 million for the year. It employs some of its staff from Barbados and imports goods and services from the US, Cayman Islands, and other Caribbean countries. New Life's repatriation policy is to transfer 50 % to 70% of its after-tax profits to the Cayman Islands. The company was of the view that for the first year of operation, there was a window of no tax obligations. In December 2023, the company realized that its understanding was not correct and therefore engaged UWI Tax Consulting Services Limited to provide tax advisory and tax compliance services. Your Group was assigned this engagement. Question: What are the tax matters that needs to be considered when operating in Barbados including any tax benefits or incentives they may consider?arrow_forwardNew Life is a multinational distribution company that started operating a Branch in Barbados on 1 January 2023. The company’s Head Office is in the Cayman Islands and is part of a group which earns more than USD 850 million for the year. It employed some of its staff from Barbados and imports good and services from the US, Cayman Islands, and other Caribbean countries. New Life repatriation policy is to transfer 50 % to 70% of its after-tax profits to the Cayman Islands. The company was of the view that for the first year of operation there was a window of no tax obligations. In December 2023, the company realized that their understanding was not correct and therefore engaged UWI Tax Consulting Services Limited to provide tax advisory and tax compliance services. Your Group was assigned this engagement. Required.Advice New Life of the tax matters that needs to be considered when operating in Barbadosincluding any tax benefits or incentives they may consider.arrow_forwardDiamond Constructions Ltd (Diamond) is a large construction company. Diamond is an Australian resident company for tax purposes. The company accountant, Bob, is in the process of preparing income tax returns for the company and staff, and seeks advice on the following matters: During the 2021/22 income year, Diamond made three frankable distributions. The first distribution ($1 million) is franked at 70%, the second distribution ($2million) is franked at 80%, and the third distribution ($1 million) is franked at 50%. (Assume a corporate tax rate for imputation purposes of 30%). Diamond also received a fully franked dividend of $1.5 million from another Australian resident company SardiusCo Ltd. Required: Advise Diamond, Bob and Charles regarding the income tax implications arising from the above facts in relation to the 2021/22 income year. In your answer make sure you refer to any relevant cases, legislative provisions, tax rulings and principles of tax lawarrow_forward
- The Angell Company has earned $150,000 before taxes during each of the last 15 years, and it expects to earn $150,000 per year before taxes in the future. This year, however, the firm incurred a loss of $650,000. It will claim a tax credit at the time it files this year’s income tax return, and it will receive a check from the U.S. Treasury. Show how Angell calculates this credit, and then indicate the firm’s tax liability for each of the next five years. Assume a 30 percent tax rate on all income to simplify the calculationsarrow_forwardYamash, a Japanese residing in the Philippines, brought garments from JB Corp., a domestic corporation, and exported the same to Japan. Total value of export is P 1,000,000. How much is the VAT-Output Tax due on the transaction?arrow_forwardGodoarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT