Money, Inc., a U.S. corporatio

Money, Inc., a U.S. corporation, has $500,000 to invest overseas. For U.S. tax purposes, any additional gross income earned by Money will be taxed at 34%. Two possibilities for investment are:

a. Invest the $500,000 in common stock of Exco (a foreign corporation). Exco common stock pays a dividend of $3 per share each year. The $500,000 would purchase 10,000 shares (or 10%) of Exco’s only class of stock (voting common).

Exco expects to earn $10 million before taxes this year and to be taxed at a flat rate of 40%. Its current E & P before taxes is estimated to be $9.4 million. Exco’s government does not withhold on dividends paid to foreign investors.

b. Invest the $500,000 in Exco bonds that pay interest at 7% per year. Assume that the bonds will be acquired at par, or face, value. Exco’s government withholds 25% on interest paid to foreign investors.

Analyze these two investment opportunities, and determine which would give Money the better return after taxes. Make sure you consider the effect of the FTC.

Write a letter to Money’s CFO Jeffrey Howard, advising the corporation of your findings. Money’s address is 9201 West South Street, Woodstock IL 60098.

Solution:

15% off for this assignment.

Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!

Why US?

100% Confidentiality

Information about customers is confidential and never disclosed to third parties.

Timely Delivery

No missed deadlines – 97% of assignments are completed in time.

Original Writing

We complete all papers from scratch. You can get a plagiarism report.

Money Back

If you are convinced that our writer has not followed your requirements, feel free to ask for a refund.