EBK CORPORATE FINANCE
4th Edition
ISBN: 9780134202785
Author: DeMarzo
Publisher: VST
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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.
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Oracle Corp, a U.S. corporation, earns $25 million of taxable income from U.S. sources and $10 million of taxable income from foreign sources. What amount of taxable income does Oracle report on its U.S. tax return?
a. $25 million.
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Scenario - Ahi Corporation is one of your clients in Hawaii. The company had a good year last year and owes the IRS $100,000,000, due on March 15. There are no penalties or interest due to the IRS. One of Ahi’s employees approaches you with the following plan to benefit from the so- called “ float” on the large payment due to the government. First, Ahi Corp. will courier its tax return and payment to the U.S. Virgin Islands. There, the tax return will be mailed to the IRS Service Center in Fresno by certified mail on the return’s due date, March 15. By doing this, the employee thinks it will take at least six days for the tax return to reach the IRS and for them to cash the $100,000,000 check. Ahi can earn 7 percent after tax on its money, so the interest earned during these six days because of the float is $19,178 per day [($100,000,000 × .07/ 365 days]. Thus, the total interest earned on the float for six days would be $115,068 ($19,178 × 6 days).
Would you recommend Ahi complete…
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...
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