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3. Americo's Earnings and Global Taxation. 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

641,000

shares outstanding. The basic operating characteristics of the various business units are as follows:(Click on

the

icon to import the table into a spreadsheet.)

Business Performance (000s)	U.S. Parent (US$)	Brazilian Subsidiary (R$)	German Subsidiary ()	Chinese Subsidiary ()
Earnings before taxes (EBT)	$4,480	R$6,190	4,420	2,530
Corporate income tax rate	35%	25%	40%	30%
Average exchange rate for the period		R$1.8696/$	0.6043/$	7.7049/$

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?

All MNEs attempt to minimize their global tax liabilities. Answer the following questions regarding Americo's global tax liabilities:

b. What is the total

amountin

U.S.

dollarsthat

Americo is paying across its global business in corporate income taxes?

c. What is Americo's effective tax rate (total taxes paid as a proportion of pre-tax profit)?

d. What would be the impact on Americo's EPS and global effective tax rate if Germany instituted a corporate tax reduction to

28%,

and Americo's earnings before tax in Germany rose to

4,960,000?

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