Problems $1\mathrm{.}131\mathrm{.}17$ are based on Americo Industries. 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 $650,000$ shares outstanding. The basic operating characteristics of the various business units are shown in the following table: Problems $1\mathrm{.}131\mathrm{.}17$ Business Performance $(000$s$)$ U$.$S$.$ Parent $($US$$)$ Brazilian Subsidiary $($reais$,$ R$$)$ German Subsidiary $($euros$,)$ Chinese Subsidiary $($yuan$,)$ Earnings before taxes $($EBT$)$ $$4,500$ R$$6,2504,5002,500$ Corporate income tax rate $35\%25\%40\%30\%$ Average exchange rate for the period $$ R$$1\mathrm{.}80/$$ $0\mathrm{.}7018/$$ $7\mathrm{.}750/$$ $1\mathrm{.}131\mathrm{.}13$ Americo Industries$$ Consolidate Earnings. Americo must pay corporate income tax in each country in which it currently has operations. After deducting taxes in each country, what are Americo$$s consolidated earnings and consolidated earnings per share in U$.$S$.$ dollars? What proportion of Americo$$s consolidated earnings arise from each individual country? What proportion of Americo$$s consolidated earnings arise from outside the United States?

$1\mathrm{.}14$

Americo$$s EPS Sensitivity to Exchange Rates $($A$).$ Assume a major political crisis wracks Brazil, first affecting the value of the Brazilian reais and, subsequently, inducing an economic recession within the country. What would be the impact on Americo$$s consolidated EPS if the Brazilian reais were to fall in value to R$$3\mathrm{.}00/$$$,$ with all other earnings and ex$-$change rates remaining the same?

$1\mathrm{.}15$

Americo$$s EPS Sensitivity to Exchange Rates $($B$).$ Assume a major political crisis wracks Brazil, first affecting the value of the Brazilian reais and, subsequently, inducing an economic recession within the country. What would be the impact on Americo$$s consolidated EPS if$,$ in addition to the fall in the value of the reais to R$$3\mathrm{.}00/$$$,$ earnings before taxes in Brazil fell as a result of the recession to R$$5,800,000?$

$1\mathrm{.}16$

Americo$$s Earnings and the Fall of the Dollar. The dollar has experienced significant swings in value against most of the world$$s currencies in recent years.

What would be the impact on Americo$$s consolidated EPS if all foreign currencies were to appreciate $20\%$ against the U$.$S$.$ dollar?

What would be the impact on Americo$$s consolidated EPS if all foreign currencies were to depreciate $20\%$ against the U$.$S$.$ dollar?

$1\mathrm{.}17$

Americo$$s Earnings and Global Taxation. All MNEs attempt to minimize their global tax liabilities. Return to the original set of baseline assumptions and answer the following questions regarding Americo$$s global tax liabilities: What is the total amount$$in U$.$S$.$ dollars$$that Americo is paying across its global business in corporate income taxes? What is Americo$$s effective tax rate $($total taxes paid as a proportion of pre$-$tax profit$)?$ What would be the impact on Americo$$s EPS and global effective tax rate if Germany instituted a corporate tax reduction to $28\%,$