AFP Updated CTP Exam Questions and Answers by hendrix

A U.S. based multinational company is filing its U.S. tax return and notes that its U.K. subsidiary had pre-tax income equal to $1 million. The U.K. subsidiary paid an effective tax rate on this income of 40%. If the U.S. tax rate is 34%, what will be the amount of the foreign tax credit on the U.S. tax return related to the U.K. income?

A multinational company owns a United Kingdom subsidiary that has total assets equal to £1 million and intercompany loans due to the parent company equal to $1 million. It would like to undertake a balance sheet hedge of the U.K. subsidiary’s GBP liability because it expects a depreciation of the pound. Given these circumstances, which of the following actions would be appropriate?

If the Federal Reserve Board increased the discount rate, you would expect:

A company has negotiated a credit facility with the following terms:

$5,000,000 line of credit

$3,000,000 average borrowing

30 basis point commitment fee on the unused portion of the line

Interest rate on advances is 1-month LIBOR plus 4%

1-month LIBOR is currently 2%

What is the annual interest rate on the line of credit?