NexusTech's Earnings and the Fall of the Dollar. Nexus Tech 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. Nexus Tech is traded on the NASDAQ. Nexus Tech currently has 652,000 shares outstanding. The basic operating characteristics of the various business units is as follows: .Nexus Tech must pay corporate income tax in each country in which it currently has operations. a. After deducting taxes in each country, what are Nexus Tech'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 Nexus Tech's consolidated EPS if all foreign currencies were to appreciate 18% against the U.S. dollar? c. What would be the impact on NexusTech's consolidated EPS if all foreign currencies were to depreciate 18% against the U.S. dollar? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Business Performance (000s) Earnings before taxes (EBT) Corporate income tax rate Average exchange rate for the period COLL U.S. Parent (US$) $4,490 21% German Subsidiary (euro, €) Brazilian Subsidiary (reais, R$) R$6,330 25% R$1.7615 $1.00 €0.7167 $1.00 €4,560 40% Chinese Subsidiary (yuan, Y) ¥2,500 30% ¥7.6631 = $1.00 X
NexusTech's Earnings and the Fall of the Dollar. Nexus Tech is a U.S.-based multinational manufacturing firm with wholly-owned subsidiaries in Brazil, Germany, and China, in addition to domestic operations in the United States. Nexus Tech is traded on the NASDAQ. Nexus Tech currently has 652,000 shares outstanding. The basic operating characteristics of the various business units is as follows: .Nexus Tech must pay corporate income tax in each country in which it currently has operations. a. After deducting taxes in each country, what are Nexus Tech's consolidated earnings and consolidated earnings per share in U.S. dollars? The dollar has experienced significant swings in value against most of the world's currencies in recent years. b. What would be the impact on Nexus Tech's consolidated EPS if all foreign currencies were to appreciate 18% against the U.S. dollar? c. What would be the impact on NexusTech's consolidated EPS if all foreign currencies were to depreciate 18% against the U.S. dollar? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Business Performance (000s) Earnings before taxes (EBT) Corporate income tax rate Average exchange rate for the period COLL U.S. Parent (US$) $4,490 21% German Subsidiary (euro, €) Brazilian Subsidiary (reais, R$) R$6,330 25% R$1.7615 $1.00 €0.7167 $1.00 €4,560 40% Chinese Subsidiary (yuan, Y) ¥2,500 30% ¥7.6631 = $1.00 X
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter17: Business Tax Credits And The Alternative Minimum Tax
Section: Chapter Questions
Problem 17P
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Transcribed Image Text:Nexus Tech's Earnings and the Fall of the Dollar. Nexus Tech is a U.S.-based multinational manufacturing firm with wholly-owned subsidiaries in Brazil,
Germany, and China, in addition to domestic operations in the United States. Nexus Tech is traded on the NASDAQ. Nexus Tech currently has 652,000 shares
outstanding. The basic operating characteristics of the various business units is as follows: Nexus Tech must pay corporate income tax in each country in
which it currently has operations.
a. After deducting taxes in each country, what are Nexus Tech's consolidated earnings and consolidated earnings per share in U.S. dollars?
The dollar has experienced significant swings in value against most of the world's currencies in recent years.
b. What would be the impact on Nexus Tech's consolidated EPS if all foreign currencies were to appreciate 18% against the U.S. dollar?
c. What would be the impact on Nexus Tech's consolidated EPS if all foreign currencies were to depreciate 18% against the U.S. dollar?
Data table
(Click on the following icon in order to copy its contents into a spreadsheet.)
Business Performance (000s)
Earnings before taxes (EBT)
Corporate income tax rate
Average exchange rate for the period
U.S. Parent
(US$)
$4,490
21%
Print
.
Done
German
Subsidiary
(euro, €)
Chinese
Subsidiary
(yuan, Y)
Brazilian
Subsidiary
€4,560
(reais, R$)
R$6,330
25%
40%
R$1.7615 $1.00 €0.7167= $1.00 ¥7.6631 $1.00
¥2,500
30%
I
X
hc
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