Exam 31: International Corporate Finance

How do the global intangible low tax income (GILTI)and foreign derived intangible income (FDII)provisions of the Tax Cut and Jobs Act of 2017 reduce the incentive for U.S.firms to shift overseas the profits due to intangible assets used to produce foreign goods?

The provision of the Tax Cuts and Jobs Act of 2017 which allows U.S.firms to exclude foreign profits from their taxable income is called the:

Consider the following equation: = (1 + )- 1 the term r$ in this equation refers to:

Use the following information to answer the question(s)below. Hammond Motors is considering an investment in the Euro area.The expected free cash flows,in euros,are uncorrelated with the spot exchange rate and are as follows: The new project,which Hammond is considering,has similar dollar risk to Hammond's other projects.Hammond knows that its overall dollar WACC is 10%,so it feels comfortable using this WACC for the project.The risk-free interest rate on dollars is 4% and the risk-free interest rate on euros is 6%.Hammond is willing to assume that capital markets in the United States and the Euro area are internationally integrated. -The NPV of this project in euros is closest to:

Which of the following statements regarding international projects is FALSE?

Use the following information to answer the question(s)below. Incorporated Tool,a U.S.firm,is considering its international tax situation.The corporate tax rate in the United States is currently 21%.Incorporated Tool has major operations in Ireland,where the tax rate is 12.5%,Japan where the tax rate is 40.7%,and Mexico,where the tax rate is 30.0%.Incorporated Tool's profits,which are fully and immediately repatriated,and foreign taxes paid for the current year are as follows: -Incorporated Tools' total U.S.tax liability on its foreign earnings is closest to:

Use the following information to answer the question(s)below. Hammond Motors is considering an investment in the Euro area.The expected free cash flows,in euros,are uncorrelated with the spot exchange rate and are as follows: The new project,which Hammond is considering,has similar dollar risk to Hammond's other projects.Hammond knows that its overall dollar WACC is 10%,so it feels comfortable using this WACC for the project.The risk-free interest rate on dollars is 4% and the risk-free interest rate on euros is 6%.Hammond is willing to assume that capital markets in the United States and the Euro area are internationally integrated. -Hammond's Euro WACC is closest to:

Use the information for the question(s)below. The current spot exchange rate,S,is $1.8862/£.Suppose that the yield curve in both countries is flat.The risk-free rate on dollars,r$,is 5.35% and the risk-free interest rate on pounds,r£,is 4.80%. -Using the covered interest parity condition,the calculated one-year forward rate F1 is closest to: