Question

Garrison is a U.S.-based multinational manufacturing firm, with wholly owned subsidiaries in Brazil, in addition to domestic operations in the United States. Garrison currently has 65,000 shares outstanding and traded on the NASDAQ. The basic operating characteristics of the business unit are as follows: Local currency Brazil (reais, R$) Earnings before tax (EBT) R$6,250 Corporate income tax rate 25% Average exchange rate R$3.5/$ What would be the earnings per share (EPS) if Brazilian reais (R$) were to appreciate 20% against the U.S. dollar? Note that earnings before tax (EBT) is just R$6,250, not R$6,250,000.

A. $0.0247

B. $0.061

C. $0.129

D. $0.250

Answer 1