Question

In: Finance

If an MNC establishes a foreign manufacturing subsidiary that buys components from the parent, the cash flows from existing operations

If an MNC establishes a foreign manufacturing subsidiary that buys components from the parent, the cash flows from existing operations (at the home country) would likely be __ affected by the project. If an MNC exports to a country and then establishes a subsidiary to produce and sell the same product in that country, cash flows from existing operations (exports from the home country) would likely be __ affected by the project.

adversely; adversely

favorably; adversely

favorably; favorably

adversely; favorably

Solutions

Expert Solution

b.favorably; adversely.

Establising a foreign manufacturing subsidiary that buys components from the parent, the cash flow from existing operations will be favorably affected, since cash flow into the home country for export of components.

If the subsidiary produces and sells the same product in a country, the cash flows from existing operations will adversely affected, since the exports from home country stops.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

If an MNC exports to a country and then establishes a subsidiary to produce and sell the same product in that country
If an MNC exports to a country and then establishes a subsidiary to produce and sell the same product in that country, cash flows from existing operations (exports from the home country) would likely be__ affected by the project.a.adverselyb. notc.favorablyd. the direction of the impact may vary
Kingsfield establishes a subsidiary operation in a foreign country on January 1, 2017. The country’s currency...
Kingsfield establishes a subsidiary operation in a foreign country on January 1, 2017. The country’s currency is the kumquat (KQ). To start this business, Kingsfield invests 10,000 kumquats. Of this amount, it spends 3,000 kumquats immediately to acquire equipment. Later, on April 1, 2017, it also purchases land. All subsidiary operational activities occur at an even rate throughout the year. The U.S. dollar ($) exchange rates for the kumquat for 2017 follow: January 1 $ 1.71 April 1 1.59 June...
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016....
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016. The following account balances for the year ending December 31, 2017, are stated in kanquo (KQ), the local currency: Sales KQ 150,000 Inventory (bought on 3/1/17) 75,000 Equipment (bought on 1/1/16) 50,000 Rent expense 10,000 Dividends (declared on 10/1/17) 20,000 Notes receivable (to be collected in 2020) 31,000 Accumulated depreciation—equipment 15,000 Salary payable 4,000 Depreciation expense 5,000 The following U.S.$ per KQ exchange rates...
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016....
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016. The following account balances for the year ending December 31, 2017, are stated in kanquo (KQ), the local currency: Sales KQ 390,000 Inventory (bought on 3/1/17) 214,500 Equipment (bought on 1/1/16) 98,000 Rent expense 26,000 Dividends (declared on 10/1/17) 32,000 Notes receivable (to be collected in 2020) 55,000 Accumulated depreciation—equipment 29,400 Salary payable 8,800 Depreciation expense 9,800 The following U.S.$ per KQ exchange rates...
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016....
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016. The following account balances for the year ending December 31, 2017, are stated in kanquo (KQ), the local currency: Sales KQ 190,000 Inventory (bought on 3/1/17) 95,000 Equipment (bought on 1/1/16) 58,000 Rent expense 12,000 Dividends (declared on 10/1/17) 22,000 Notes receivable (to be collected in 2020) 35,000 Accumulated depreciation—equipment 17,400 Salary payable 4,800 Depreciation expense 5,800 The following U.S.$ per KQ exchange rates...
??A? U.S.-based MNC has a foreign subsidiary that earns $ 252000 before local? taxes, with all...
??A? U.S.-based MNC has a foreign subsidiary that earns $ 252000 before local? taxes, with all the? after-tax funds to be available to the parent in the form of dividends. The applicable taxes consist of a 33 % foreign income tax? rate, a foreign dividend withholding tax rate of 9.6 %?, and a U.S. tax rate of 30 %. Calculate the net funds available to the parent MNC? if: a.??Foreign taxes can be applied as a credit against the? MNC's...
In January of 2019, a wholly owned subsidiary sold Equipment to the parent for a cash...
In January of 2019, a wholly owned subsidiary sold Equipment to the parent for a cash price of $122,500. The subsidiary had acquired the equipment at a cost of $140,000 and the estimated useful life when purchased was 10 years, and there was no salvage value. The subsidiary had depreciated the equipment for 4 years at the time of sale using the straight line method. The parent retained the depreciation policy of the subsidiary and depreciated the equipment over its...
Tax credits A U.S.-based MNC has a foreign subsidiary that earns $246,000 before local taxes, with...
Tax credits A U.S.-based MNC has a foreign subsidiary that earns $246,000 before local taxes, with all the after-tax funds to be available to the parent in the form of dividends. The applicable taxes consist of a 32% foreign income tax rate, a foreign dividend withholding tax rate of 9.2 %, and a U.S. tax rate of 28%. Calculate the net funds available to the parent MNC if: a. If foreign taxes can be applied as a credit against the...
A parent company has deemed its wholly owned subsidiary a cash-generating unit. The parent has determined...
A parent company has deemed its wholly owned subsidiary a cash-generating unit. The parent has determined that an impairment loss has occurred as the recoverable amount of the subsidiary is less than its carrying value. Explain how the recoverable amount is determined. Explain how this impairment loss should be allocated.
Golden Eagle Mining, a U.S.-based MNC has a foreign subsidiary that earns $1003000 before local taxes,...
Golden Eagle Mining, a U.S.-based MNC has a foreign subsidiary that earns $1003000 before local taxes, with all the after tax funds to be available to the parent in the form of dividends. The foreign income tax rate is 24 percent, the foreign dividend withholding tax rate is 10 percent, and the firm's U.S. tax rate is 29 percent. What are the funds available to the parent MNC if foreign taxes can be applied as a credit against the MNC's...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT