Question

Please assist me with part b and c of the problem. ​Americo's Earnings and the Fall of the Dollar. 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

TILUS LICU UIT DR. welILU Lunelliy las 04 1,000 Slalo Uustaluny. Te DubIL Upel ally cual alle SLILS UI ile ValUUS UUSIllos U S 15 05 IUNIUWS. CILA UIT Lil Y ICUIT LUMIVUIL lile laule LU a Spieaugieel Chinese Subsidiary Business Performance (000s) Earnings before taxes (EBT) Corporate income tax rate Average exchange rate for the period U.S. Parent (USS) $4,550 35% Brazilian Subsidiary (R$) R$6,340 25% R$1.8795/5 German Subsidiary (€) €4,520 40% €0.7739/$ ¥2,420 30% ¥7.7563/$ 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? The dollar has experienced significant swings in value against most of the world's currencies in recent years. b. What would be the impact on Americo's consolidated EPS if all foreign currencies were to appreciate 22% against the U.S. dollar? c. What would be the impact on Americo's consolidated EPS if all foreign currencies were to depreciate 22% against the U.S. dollar? Earnings before taxes (local currency) $ 4,550.00 R$ 6,340.00 € 4,520.00 Less corporate income taxes $ (1,592.50) R$ (1,585.00) € (1,808.00) Net profits of individual subsidiary $ 2,957.50 R$ 4,755.00 € 2,712.00 Avg exchange rate for the period (fc/5) Net profits of individual subsidiary 1.5406 3,086.46 9922 2733.32 $ 2,957.50 $ $_ Enter any number in the edit fields and then click Check Answer.

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shares outstanding. The basic operating characteristics of the various business units is as​ follows

Answer 1

Baseline exchange rate (fc/S) Percent change (+ appreciation, - depreciation) New exchange rate (fc/5) 1.8795 22% 1.5406 0.7739 22% 0.6343 7.7563 22% 6.3576 Appreciation Case U.S. Parent Company (USS) Brazilian Subsidiary (reais, RS) German Subsidiary (euros, €) Chinese Subsidiary (yuan, Y) Business Performance (000s) Earnings before taxes. EBT (local currency) Less corporate income taxes Net profits of individual subsidiary 35% 4,550.00 (1,592.50) 2,957.50 25% 6,340.00 (1,585.00) 4,755.00 40% 4,520.00 (1,808.00) 2,712.00 30% 2,420.00 (726.00) 1,694.00 6.3576 Avg exchange rate for the period (fc/5) Net profits of individual subsidiary (USS) 1.5406 3,086.51 0.6343 4.275.28 $ 2,957.50 $ 5 5 266.45 $ Consolidated profits (total across units) Total diluted shares outstanding (000s) 10,585.75 641.00 Baseline eamings per share (EPS) S 14.37 EPS if foreign currencies appreciate $ 16.51 EPS has changed by: 14.9%

Baseline exchange rate (fc/5) Percent change (+ appreciation - depreciation) New exchange rate (fc/5) 1.8795 -22% 2.4096 0.7739 -22% 0.9922 7.7563 -22% 9.9440 Depreciation Case U.S. Parent Company (USS) Brazilian Subsidiary (reais, RS) German Subsidiary (euros, €) Chinese Subsidiary (yuan, Y) Business Performance (000s) Earnings before taxes. EBT (local currency) Less corporate income taxes Net profits of individual subsidiary 35% 4,550.00 (1,592.50) 2,957.50 25% 6,340.00 (1,585.00) 4,755.00 40% 4,520.00 (1,808.00) 2,712.00 30% 2,420.00 (726.00) 1,694.00 Avg exchange rate for the period (fc/5) Net profits of individual subsidiary (USS) $ 2,957.50 $ 2.4096 1,973.34 0.9922 2,733.38 $ 9.9440 170.35 $ Consolidated profits (total across units) Total diluted shares outstanding (000s) 7,834.57 650.00 Baseline earnings per share (EPS) S 14.37 EPS if foreign currencies depreciate $ 12.05 EPS has changed by: -16.1%