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KT Enterprises,a U.S.import-export trading company,is considering its international tax situation.KT's U.S.tax rate is 21%.KT has significant operations in both Japan and Ireland.In Japan the current exchange rate is ¥118.4/$ and earnings in Japan are taxed at 41%.In Ireland the current exchange rate is $1.27/€ and earnings in Ireland are taxed at 12.5%.KT's profits,which are fully and immediately repatriated,and foreign taxes paid for the current year are shown here (in millions):
-After the Japanese taxes are paid,the amount of the earnings before interest and after taxes in dollars from the Japanese operations is closest to:

Question

Use the information for the question(s)below.
KT Enterprises,a U.S.import-export trading company,is considering its international tax situation.KT's U.S.tax rate is 21%.KT has significant operations in both Japan and Ireland.In Japan the current exchange rate is ¥118.4/$ and earnings in Japan are taxed at 41%.In Ireland the current exchange rate is $1.27/€ and earnings in Ireland are taxed at 12.5%.KT's profits,which are fully and immediately repatriated,and foreign taxes paid for the current year are shown here (in millions): 
-After the Japanese taxes are paid,the amount of the earnings before interest and after taxes in dollars from the Japanese operations is closest to:

Quizplus · Accepted Answer

First, we need to calculate the earnings before taxes in Japan:
Earnings before taxes in Japan = ¥4,350 million / ¥118.4 = $36.71 million
Next, we need to calculate the amount of taxes paid in Japan:
Taxes paid in Japan = ¥4,350 million x 41% / ¥118.4 = $15.07 million
Finally, we can calculate the earnings after taxes in Japan:
Earnings after taxes in Japan = $36.71 million - $15.07 million = $21.64 million
Therefore, the closest answer choice is B) $29.5 million, which is the earnings after taxes in Japan plus the earnings in Ireland: $21.64 million + $7.86 million = $29.5 million.

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