Question

In: Finance

Assume a Spanish affiliate repatriates as dividends one quarter of the after tax profits it earns(...

Assume a Spanish affiliate repatriates as dividends one quarter of the after tax profits it earns( i.e dividend payout ratio = 25%). If the income tax rate in Spain is 30% and there is a withholding tax of 15% what is the effect on the parent company’s US tax bill if the Spanish affiliate had pre-tax profit equal to $1000,000 ? Assume the US tax rate is 35%.

Select the right answer:
a. $12,500 additional taxes paid
b. $12,500 tax credit received
c. $13,750 additional taxes owed
d. $13,750 tax credit received

Note: Please answer the right one because i have found the wrong answer on this one from different people.

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Assume a Chinese affiliate repatriates as dividends one-quarter of the after-tax profits it earns (ie, dividend...
Assume a Chinese affiliate repatriates as dividends one-quarter of the after-tax profits it earns (ie, dividend payout ratio = 25%). If the income tax rate in China is 30% and there is a withholding tax of 15%, what is the effect on the parent comany's US tax bill if the Chinese affiliate had pre-tax profit equal to $1,000,000 USD? Assume the US Tax rate is 35%. Please show work.
Tax efficiency A. measures the effectiveness of the firm to keep its profits on an after-tax...
Tax efficiency A. measures the effectiveness of the firm to keep its profits on an after-tax basis. B. measures the ability of the firm to reduce taxes by internationalizing their operations. C. is higher for firms with a strong research and development team. D. measures the amount of revenue that is taxable for every dollar of invested capital. E. is higher for firms with a high tax rate.
Volkswagen saw a 95% drop in its fourth quarter profits in 2004 after an unexpected surge...
Volkswagen saw a 95% drop in its fourth quarter profits in 2004 after an unexpected surge in the value of the Euro left the company with losses of $1.5 billion. 1. What is hedging? Explain how Volkswagen's failure to fully protect itself against foreign exchange fluctuations had a negative effect on the company? What can Volkswagen and other companies learn from this experience? 2. Why was Volkswagen so vulnerable to the change in the value of the Euro against the...
Give an example of the change in NON PROFITS after the tax reform under Trump.
Give an example of the change in NON PROFITS after the tax reform under Trump.
Glitter Inc. uses one-quarter common stock and three-quarters debt to finance their operations. The after-tax cost...
Glitter Inc. uses one-quarter common stock and three-quarters debt to finance their operations. The after-tax cost of debt is 5 percent and the cost of equity is 13 percent. The management of Glitter Inc. is considering an expansion project that costs $1.2 million. The project will produce a cash inflow of $50,000 in the first year and 150,000 in each of the following 10 years (i.e., $150,000 in years 2 through 11). What is the WACC and should Glitter Inc....
A firm has a net profits after taxes of $75,600, a 30% tax rate, a 10%...
A firm has a net profits after taxes of $75,600, a 30% tax rate, a 10% interest rate, and a 10 times interest earned ratio. Based on the given information, the firm earnings before interest and taxes equals? Select one: a. $100,000 b. $110,000 c. $130,000 d. $120,000
1. When analyzing a firm’s financial performance, should the analyst focus on the incremental after-tax profits...
1. When analyzing a firm’s financial performance, should the analyst focus on the incremental after-tax profits or the incremental after-tax cash flows of the firm? Explain your reasoning! 2. Holding all else constant, how would a significant increase in interest bearing debt impact the measure of the firm’s Free Cash Flow? Explain! 3. If a firm uses an accelerated depreciation expense method (MACRS) versus straight line depreciation expense for a newly acquired asset, what would be the impact on the...
You have 6 years of after-tax cash flows in the table. Assume the following:
You have 6 years of after-tax cash flows in the table. Assume the following:• Initial Investment at Time zero =$1,800• WACC=9.75%Compute the NPV of the investment. Round to the second decimal place and DO NOT include the $ special character. Hence, 45.678 would be properly written as 45.68 in this problem.
Payback Period Each of the following scenarios is independent. Assume that all cash flows are after-tax...
Payback Period Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Colby Hepworth has just invested $550,000 in a book and video store. She expects to receive a cash income of $120,000 per year from the investment. b. Kylie Sorensen has just invested $1,560,000 in a new biomedical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $780,000, $490,000, and $290,000. c. Carsen Nabors invested...
Payback Period Each of the following scenarios is independent. Assume that all cash flows are after-tax...
Payback Period Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Colby Hepworth has just invested $450,000 in a book and video store. She expects to receive a cash income of $120,000 per year from the investment. Kylie Sorensen has just invested $1,520,000 in a new biomedical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $760,000, $440,000, and $320,000. Carsen Nabors invested in a project...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT