Retained earnings by subsidiary corporate taxes paid

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Retained Earnings by Subsidiary Corporate Taxes Paid to Host Government Conversion of Funds to Parent’s Currency Parent Cash Flows to Parent
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A parent’s perspective is appropriate when evaluating a project, since any project that can create a positive net present value for the parent should enhance the firm’s value. However, one exception to this rule may occur when the foreign subsidiary is not wholly owned by the parent. Subsidiary versus Parent Perspective
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Input Utk Penganggaran Modal MNC MNC membutuhkan proyeksi data ekonomi dan keuangan berikut: 1. Initial investment / Investasi Awal 2. Consumer demand / Permintaan Konsumen 3. Product price / Harga jual 4. Variable cost / Biaya variabel 5. Fixed cost / Biaya tetap 6. Project lifetime / Usia proyek 7. Salvage (liquidation) value / Nilai sisa (nilai likuidasi) 8. Fund-transfer restrictions / Restriksi-restriksi transfer dana 9. Tax laws / Undang-undang perpajakan 10. Exchange rates / Nilai tukar 11. Required rate of return / Tingkat pengembalian yang diinginkan
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Multinational Capital Budgeting Capital budgeting is necessary for all long-term projects that deserve consideration. One common method of performing the analysis is to estimate the cash flows and salvage value to be received by the parent, and compute the net present value (NPV) of the project.
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If NPV > 0, the project can be accepted. Multinational Capital Budgeting The Net Present Value (NPV) of the project is estimated as the present value of the net cash flows to the parent as a result of the project minus the initial outlay for the project,
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Capital Budgeting Analysis Period t 1.Demand (1) 2.Price per unit (2) 3.Total revenue (1) x (2)=(3) 4.Variable cost per unit (4) 5.Total variable cost (1) x (4)=(5) 6.Annual lease expense (6) 7.Other fixed periodic expenses (7) 8.Noncash expense (depreciation) (8) 9. Total expenses (5)+(6)+(7)+(8)=(9) 10. Before-tax earnings of subsidiary (3) (9)=(10) 11. Host government tax tax rate x (10)=(11) 12. After-tax earnings of subsidiary (10) (11)=(12)
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Period t 13.Net cash flow to subsidiary (12)+(8)=(13) 14.Remittance to parent (14) 15.Tax on remitted funds tax rate x (14)=(15) 16.Remittance after withheld tax
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