The Daily Planet Has a Wholly Owned Foreign Subsidiary in Brazil.The

question 94

Essay

The Daily Planet has a wholly owned foreign subsidiary in Brazil.The subsidiary earns 30 million reals per year before taxes in Brazil.The foreign income tax rate is 30%.The subsidiary repatriates the entire after-tax profits in the form of dividends to the Daily Planet.The U.S.corporate tax rate is 40% of foreign earnings before taxes.
a)Compute after-tax cash flow to the Daily Planet from this investment (in reals).Use the table below.

$\begin{array}{llcc} \text {Before-tax earnings (in reals) } &\underline{\quad\quad\quad} \\ \text {Foreign income tax at \(30 \%\) } &\underline{\quad\quad\quad}\\ \text { Earnings after foreign income taxes } &\underline{\quad\quad\quad}\\ \text { Dividends repatriated } &\underline{\quad\quad\quad}\\ \text { Gross U.S. taxes at \(40 \%\) of foreign earnings before taxes } &\underline{\quad\quad\quad}\\ \text {Foreign tax credit } &\underline{\quad\quad\quad}\\ \text { Net U.S. taxes payable } &\underline{\quad\quad\quad}\\ \text { After-tax cash flow } &\underline{\quad\quad\quad}\\ \end{array}$








b)If the exchange rate is .56 ($/reals),what is the after-tax cash flow in dollars?
c)Depreciation related cash flow is 2 million reals per year for five years for another Daily Planet investment in Brazil.The exchange rate is expected to be .59 ($/reals).The Daily Planet applies a 15% discount rate to foreign cash flows.What is the present value (in dollars)of the depreciation related cash flow?

Identify the purposes of negotiated settlements in administrative actions.

Recognize the requirements for regulatory flexibility analyses.

Comprehend the structure and authority of executive and independent regulatory agencies.

Appreciate the importance of maintaining good relations with regulatory agencies.

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Definitions:

Loyal Customers

Individuals who repeat purchase from a specific brand or company due to satisfaction, preference, or perceived value.

Wealthy Residents

Individuals or families residing in a specific area that possess high net worth or considerable financial resources.

Infomercials

Lengthy television advertisements that include detailed information and persuasive selling about a product or service, often featuring demonstrations and testimonials.

Advertorials

Advertising content that is designed to mimic the appearance and style of editorial content, blending marketing messages with informational content.