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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 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 following table.
Before-tax earnings in (in reals) Foreign income tax at 30% Earnings
after foreign income taxes Dividends repatriated Gross US taxes at 40%
of foreign earnings before taxes Foreign tax credit Net US taxes payable
After-tax cash flow

 

Apr 30 2020 View more View Less

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