Cross Border Valuation Issue Essay

9645 Words Nov 16th, 2011 39 Pages
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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In addition, there is a special local corporate tax (national tax), a business tax (a local tax which is deductible from taxable income) and prefectural and municipal inhabitant taxes (also local tax), which vary depending on the locality, the amount of paid-in capital of the company, etc. The rate shown (40.69%) is the illustrative effective rate that applies for a company in Tokyo with paid-in capital of more than JPY 100 million after taking into account a deduction for business tax. Size based business tax is also levied on a company with paid-in capital of more than JPY 100 million, so the overall tax rate for such companies can be higher than 40.69%. For small and medium sized companies with paid-in capital of JPY 100 million or less, the effective tax rate in Tokyo is 42.05% with no size based business tax imposed.
3 The federal corporate income tax is applied on a sliding scale. The marginal federal corporate income tax rate on the highest income bracket of corporations (US$18.33 million for 2009) is 35%. State and local governments may also impose income taxes at rates ranging from less than 1% to 12% (top marginal rates average approximately 7.5%). A corporation may deduct its state and local income tax expense when computing its federal taxable income, generally resulting in a net effective rate of approximately 40%. The effective rate may vary significantly, depending on the locality in which a corporation

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