Reference no: EM133174572
Question - Saint Leo University (SLU), a British company, is considering establishing an operation in the United States to assemble and distribute smart speakers. The initial investment is estimated to be 25,000,000 British pounds (GBP), which is equivalent to 30,000,000 U.S. dollars (USD) at the current exchange rate. Given the current corporate income tax rate in the United States, SLU estimates that total after-tax annual cash flow in each of the three years of the investment's life would be US$10,000,000, US$12,000,000, and US$15,000,000, respectively. However, the U.S. national legislature is considering a reduction in the corporate income tax rate that would go into effect in the second year of the investment's life and would result in the following total annual cash flows: US$10,000,000 in year 1, US$14,000,000 in year 2, and US$18,000,000 in year 3. SLU estimates the probability of the tax rate reduction occurring at 50 percent. SLU uses a discount rate of 12 percent in evaluating potential capital investments. Present value factors at 12 percent are as follows:
The U.S. operation will distribute 100 percent of its after-tax annual cash flow to SLU as a dividend at the end of each year. The terminal value of the investment at the end of three years is estimated to be US$25,000,000. The U.S. withholding tax on dividends is 5 percent; repatriation of the investment's terminal value will not be subject to U.S. withholding tax. Neither the dividends nor the terminal value received from the U.S. investment will be subject to British income tax.
Required -
1- Determine the expected net present value of the potential U.S. investment from a project perspective.
2- Determine the expected net present value of the potential U.S. investment from a parent company perspective.
|
Compare the various change management models
: Compare and contrast the various change management models. Provide a brief overview of your comparison.
|
|
Journalize the entries to record the summarized operations
: Materials requisitioned, $427,900, of which $55,630 was for general factory use. Journalize the entries to record the summarized operations
|
|
What are two positive outcomes of recommendations
: Question 1: What are three issues that Tesla faces and what are three recommendations for those issues?
|
|
Examine at least three causes of internal whistle-blowing
: Loyalty does not mean covering up your supervisor or manager for his serious wrong doings. After all a manager has a fiduciary duty to the owners of the busines
|
|
Determine the expected net present value of the potential
: The terminal value of the investment at the end of three years is estimated to be US$25,000,000. Determine the expected net present value of the potential
|
|
Essentialism and non-essentialist view of culture
: What do you learn about essentialism and non-essentialist view of culture?
|
|
Unfair financial treatment of the host-country workers
: Outsourcing has been a widely-accepted strategy for businesses that pursue low cost in materials and labor, economies of scale, and access to global markets. S
|
|
What does the result tell you about the company
: Maki Corporation had cash flows from operating activities during the past year of $194,000. What does the result tell you about the company
|
|
Determine which products should be processed beyond the sop
: A container of honey butter, jam and syrup includes, respectively, 10 pounds, 6 pounds and 2 pounds. Determine which products should be processed beyond the SOP
|