CROSS-BORDER VALUATION ISSUES.
Ninfa Borth Altadonna Jeff Fosler Susan Hua
Shawn Kennedy Brian Limurti Alex Santibanez
Valuation and Corporate Combinations
Finance 668.25
Sat., Dec. 4, 2010
Contents
I. Executive Summary 3 II. Summary of Key Terms & Concepts 3 III. Discuss various Valuation Implications and Applicability to MNC’s & global capital markets 13 IV. Discuss DCF Methods (Multiple analyses in US or Foreign comparables) 18 V. Discuss a Short Example 23 VI. Real World Company Case Study 1: 25 VII. Real World Company Case Study 2: 27 VIII. Conclusion 28
I. Executive Summary
There are many
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Exchange Rate is the rate at which one currency may be converted into another. The exchange rate is used when simply converting one currency to another (such as for the purposes of travel to another country), or for engaging in speculation or trading in the foreign exchange market. There are a wide variety of factors which influence the exchange rate, such as interest rates, inflation, and the state of politics and the economy in each country.
Tax Rates – The percent of income paid as tax, or the percent of the value of a good, service or asset paid as tax.
*Created from following source: http://www.business.nsw.gov.au/aboutnsw/climate/A14_corp_tax_rates.htm
1 The effective tax rate for foreign companies with income less than INR 10 million is 41.2% (40% basic corporate tax plus education cess of 3% on tax); otherwise it is 42.23% (40%, plus surcharge of 2.5% of the tax, plus education cess of 3% on tax and surcharge). The effective tax rate for domestic companies having income less than INR 10 million is 30.9% (30% basic corporate tax plus education cess of 3% on tax), otherwise it is 33.99% (30% plus surcharge of 10% of the tax, plus education cess of 3% on tax and surcharge). A Minimum Alternate Tax (MAT) is levied at 10% of the adjusted profits of companies where tax liability is less than 10%
The exchange rate is the price of one currency in terms of another. A fall in the value of the pound is known as a depreciation and affects both the level of aggregate demand and the costs of production for firms in the UK economy. //One way in which a fall in the exchange rate can be beneficial for the UK economy is that it “should
Currency exchange rates can be categorised as floating, in which case they constantly change based on a number of factors, or they can subsequently be fixed to another currency, where they still float, but they additionally move in conjunction with the currency to which they are pegged. Floating rates are a reflection of market movement, demonstrating the principles of both demand and supply, as well as limit imbalances in the international financial system. Fixed exchange rates are predominantly used by developing countries as they are preferred for their greater stability. They grant further control to central banks to set currency values, and are often used to evade market abuse. (MacEachern, A. 2008; Simmons, P.
One needs to have a base level understanding of what defines an exchange rate. According to Investopedia, a foreign exchange rate is “The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another.”(Investopedia, 2012) The process by which foreign exchange rates are determined is really not any different than any other
Taxes is when the state takes a percentage of the money you make to help the community or the state. Also one reason we get taxed is to pay off the government workers. Another reason we get taxed is to pay for the public buildings and public roads we use like libraries, schools, and highways. Finally another reason we get taxed is to help the poor or less unfortunate also to help an organization.
rates of each political government. When a political government sets the tax rate it is recorded in
Exchange rates play a pivotal role in the relationships between individual economies and the global economy. Almost all financial flows are processed through the exchange rate, as a result the movements and fluctuations of the exchange have a significant impact on international competitiveness, trade flows, investment decisions and many other factors within the economy. Due to the increasing globalisation of the world economy, trade and financial flows are becoming more accessible
An exchange rate is the price for which one currency is worth converted into another rate. The exchange rate is determined by the supply and demand conditions of relevant currencies in the market transaction of currency exchanges occur in the foreign exchange markets. For example, currently, the £1 is worth $1.67 which means that at this stage, the pound is stronger than the dollar. Businesses should ensure that they frequently check the exchange rates to see if any changes to their prices need to be made or if the exchange rate benefits them. If Iron Bru were to export a large amount of products to a country such as Germany or Poland, there will
The exchange rate is the currency of a country expressed in terms of another currency, for example, US dollar or other nation’s currency compared to Canadian dollar. Canada has a flexible system when it comes to exchange rate system. Canada targets inflation to maintain the domestic value of the Canadian dollar. The exchange rate for the Canadian dollar against US dollar and other currency can be affected by supply and demand for Canadian dollar in foreign exchange market. Canada competes with many other countries for the share of US market, which is one of their top traders. However, many factors can affect the currency of the Canadian dollar with dominant role of different point in time. These factors include; the world prices for commodities.
The Exchange rate is the amount one country will buy another country’s currency. The conversion of currency is not 1 dollar for 1 dollar. The exchange rate between Australia and America is $0.7676 for 1 Australian dollar. Exchange rates can change from day to day. Back in 2011 the exchange rate between Australia and the USA was 1 Australian dollar would buy 1.015 US dollars. It was almost 1 for 1.
An exchange rate is the value of a currency compared another currency to find a ratio and a rate of exchange if one were to take place. According to X-Rates these some exchange rates with the United States dollar; 1 USD to .90 Euro, 1 USD to .70 British pound, 1 USD to 1.33 Canadian dollar, 1 USD to 113.77 Japanese Yen, and 1 USD to 6.5 Chinese
Taxes are the dollars that we pay to government to supply the services that are not or can not be provided through the free enterprise system. Taxes have been around since the beginning of organized societies. They come in various forms. Most common are income taxes both federal and local government. These taxes are assessed on the amount of income a person earns. Other taxes come in the form of user taxes; these taxes are imposed on the people that are using the goods being taxed, such as gas tax, alcohol tax, sales tax, and luxury taxes. Property taxes make up the major revenues for local and city governments. Furthering the burden of taxation are taxes that are attached to such bills as utility
Exchange Rate: "The rate at which one unit of domestic currency is exchanged for a given amount of foreign currency"
The tax system has been a debatable topic for as long as taxes have been imposed on individuals, households and businesses. Tax is money earned by the state through the taxation of people. It is distributed and used as funding for schools and other public services. In addition to paying the salaries of government workers, people’s tax dollars also help support programs, such as police men and firefighters. Tax money also helps to ensure the roads you travel on are safe and well-maintained, to fund public libraries and parks, and types of government programs that help the poor and less fortunate. The current tax system that is implemented in the United States is the Progressive tax. There are 3 types of taxes, which are Proportional tax, Progressive
If the company locate in one of India’s six Free Trade Zones the tax will be lower. However, still higher than the U.S.
“Exchange rate can be defined as the price of one currency expressed in terms of another currency” (Reserve Bank of Australia, 2014). Australia follows floating exchange rates, under this method the value of a country’s currency change frequently. The market rate will depend on the demand and