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Chapter_01 - Problem 1.6 Luzon Industries Consolidated...

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Problem 1.6 Luzon Industries' Consolidated Results US Parent Brazilian German Chinese Company Subsidiary Subsidiary Subsidiary Business Performance (000s) (US$) (reais, R$) (euros, €) (yuan, Y) Earnings before taxes, EBT (local currency) 4,500.00 6,250.00 4,500.00 2,500.00 Less corporate income taxes 35% (1,575.00) 25% (1,562.50) 40% (1,800.00) 30% (750.00) Net profits of individual subsidiary 2,925.00 4,687.50 2,700.00 1,750.00 Avg exchange rate for the period (fc/$) ------ 1.8000 0.7018 7.7500 Net profits of individual subsidiary (US$) $2,925.00 $2,604.17 $3,847.25 $225.81 Consolidated profits (total across units) $9,602.22 Total diluted shares outstanding (000s) 650.00 a. Consolidated earnings per share (EPS) $14.77 b. Proportion of total profits originating by country 30.5% 27.1% 40.1% 2.4% c. Proportion of total profits originating from outside the United States 69.5% Problems 6 through 10 are based on Luzon Industries. Luzon 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. Luzon is traded on the NADSAQ. Garrison currently has 650,000 shares outstanding. The basic operating characteristics of the various business units are as follows:
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Problem 1.9
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