QUESTION 2 MyFood Ltd, located in the state of Selangor, Malaysia, manufactures frozen Malaysian food and plan to distribute its frozen food California, U.S. In order to be closer to its U.S. market, MyFood is considering moving some of its manufacturing operations to southern California. The operations in California will pay 80% of its accounting profit to MyFood as an annual cash dividend. Assumptions Sales price per unit, Year 1 (USS) Sales price increase, per year Initial sales volume, Year 1, units Sales volume increase, per year Production costs per unit, Year 1 General and administrative expenses per year Production cost per unit increase, per year Depreciation expenses per year Terminal value discount rate MyFood WACC (RM) Value $5.00 3.00% 2,000,000 5.00% $4.00 4.00% $100,000 $80,000 16.00% 20.00% Required: а. Prepare the capital budgeting analysis based on the above data. (Hint: Calculate the present value of the investment in US Dollar and Ringgit Malaysia) Capital Budgeting Analysis Year 0 Year 1 Year 2 Year 3 Sales price, USS Sales volume Revenue Costs per package Total costs Gross profit Less general & administration expenses Less depreciation expenses Operating profit before tax Less U.S. corporate income taxes Net income Dividends distributed (S)(?% of net income) Exchange rate (RM/S) Dividends remitted to parent (RM) Dividend received, after-tax (RM) Terminal value, US$ (discounted @?%) (dividend in Year 3/0.20) Terminal value, RM Total cash flows for discounting (RM) Present value factor (PVIF) (@?%) Present value of total cash flows (RM) Cumulative NPV (RM) in US dollars b. + Assume subsidiary in US remitted 100% of net cash flow and US has charged 10% withholding tax on any funds sent to the parent. How much is the NPV? C. Compare your result in (a) and (b). Advise to the management which is the best practice.

Compute the increase or decrease in net income

Global Reach, Inc., is considering opening a new warehouse to serve the Southwest region. Darnell Moore, controller for Global Reach, has been reading about the advantages of foreign trade zones. He wonders if locating in one would be of benefit to his company, which imports about 90 percent of its merchandise (e.g., chess sets from the Philippines, jewelry from Thailand, pottery from Mexico, etc.). Darnell estimates that the new warehouse will store imported merchandise costing about 16.78 million per year. Inventory shrinkage at the warehouse (due to breakage and mishandling) is about 8 percent of the total. The average tariff rate on these imports is 5.5 percent. Required: 1. If Global Reach locates the warehouse in a foreign trade zone, how much will be saved in tariffs? Why? (Round your answer to the nearest dollar.) 2. Suppose that, on average, the merchandise stays in a Global Reach warehouse for nine months before shipment to retailers. Carrying cost for Global Reach is 6 percent per year. If Global Reach locates the warehouse in a foreign trade zone, how much will be saved in carrying costs? What will the total tariff-related savings be? (Round your answers to the nearest dollar.) 3. Suppose that the shifting economic situation leads to a new tariff rate of 13 percent, and a new carrying cost of 6.5 percent per year. To combat these increases, Global Reach has instituted a total quality program emphasizing reducing shrinkage. The new shrinkage rate is 7 percent. Given this new information, if Global Reach locates the warehouse in a foreign trade zone, how much will be saved in carrying costs? What will the total tariff-related savings be? (Round your answers to the nearest dollar.)

California orange Grove produces solve this general accounting question