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A$.$ B&N must pay corporate tax in each country in which it currently has operations. After deducting I. Answer the following problems. Show your calculations and make sure to use complete sentences to

explain your answers if needed...

Problem $1.[26$ pts$].$

$B$&$N$ is a U$.$S$.-$based multinational manufacturing firm, with wholly owned subsidiaries in

Germany and China, in addition to domestic operations in the United States. B&N is traded on the New

York Stock Exchange. B&N currently has $800,{000}_{?}$ shares outstanding. The basic operating

characteristics of the various business units are as follows:A$.$ B&N must pay corporate tax in each country in which it currently has operations. After deducting

taxes in each country, compute the consolidated earnings and consolidated earnings per share

$($EPS$)$ in U$.$S$.$ dollars.

B$.$ What is the proportion of $B$&$N$ consolidated earnings originating from each individual country?

C$.$ What is the proportion of B&N consolidated earnings originating from outside the United States?

D$.$ Assume that the war in Europe affecting the value of the Euro and inducing a severe economic

recession within Germany. What would be the impact on B&N consolidated Earnings per Share

$($EPS$)$ if the Euros were to fall in value to $\frac{0\mathrm{.}918}{\text{\$}},$ with all other earnings and exchanges remaining

the same?

E$.$ In addition to the fall of the Euro value, earnings before taxes in Germany fell because of the

recession to $1,500,000,$ what would be the impact on the $B$&$N$ consolidated EPS?

F$.$ Return to the original set of baseline assumptions $[$that is by ignoring D$)$ and E$)]$ and answer the

following questions regarding B&N$\text{'}$s global tax liabilities.

What is the total tax$-$in U$.$S$.$ dollars$-$which B&N is paying across its global business in

corporate income taxes?

What is $B$&$N\text{'}$ effective tax rate $($that is total taxes paid as a proportion of pre$-$tax profits$)?$

What would be the impact on B&N$\text{'}$s EPS and global effective tax rate if China instituted a

corporate tax reduction to $25\%,$ and earnings before tax in China increased to $5,000,000?$

taxes in each country, compute the consolidated earnings and consolidated earnings per share

$($EPS$)$ in U$.$S$.$ dollars.

B$.$ What is the proportion of $B$&$N$ consolidated earnings originating from each individual country?

C$.$ What is the proportion of B&N consolidated earnings originating from outside the United States?

D$.$ Assume that the war in Europe affecting the value of the Euro and inducing a severe economic

recession within Germany. What would be the impact on B&N consolidated Earnings per Share

$($EPS$)$ if the Euros were to fall in value to $\frac{0\mathrm{.}918}{\text{\$}},$ with all other earnings and exchanges remaining

the same?

E$.$ In addition to the fall of the Euro value, earnings before taxes in Germany fell because of the

recession to $1,500,000,$ what would be the impact on the $B$&$N$ consolidated EPS?

F$.$ Return to the original set of baseline assumptions $[$that is by ignoring D$)$ and E$)]$ and answer the

following questions regarding B&N$\text{'}$s global tax liabilities.

What is the total tax$-$in U$.$S$.$ dollars$-$which B&N is paying across its global business in

corporate income taxes?

What is $B$&$N\text{'}$ effective tax rate $($that is total taxes paid as a proportion of pre$-$tax profits$)?$

What would be the impact on B&N$\text{'}$s EPS and global effective tax rate if China instituted a

corporate tax reduction to $25\%,$ and earnings before tax in China increased to $5,000,000?$

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