question and answer

Topics: Dividend tax, Tax, Tariff Pages: 5 (1065 words) Published: September 29, 2014
Section M
1) Parties Involved in the Agreement: Tanaka and ParaInfo and Government Approved. 2) General Description of the Agreement
Tanaka and ParaInfo have entered into a joint venture agreement to operate in Paradiso. Tanaka has agreed to sell Input Units and Logic Units to ParaInfo and ParaInfo has agreed to manufacture Output Units and do the Final Assembly. ParaInfo will distribute within Paradiso and export to Tanaka international distributorship. 3) Specific Details of the Agreement

Investment Required: $35,000,000
Plants Required: 2 Standard Plants for Output Units and Final Assembly Investment Provided by Tanaka ($): $25,000,000
Investment Provided by ParaInfo ($): $10,000,000
Investment Provided by Paradiso ($): $0
Tanaka’s Equity Interest (%): 71.4% in year 1 and then adjusted for buy-back ParaInfo’s Equity Interest (%):28.6% in year 1 and then adjusted for buy back Paradiso Tarrifs on Imports (%): 20%
Paradiso Tarrifs on Imports for Export (%): 0%
Paradiso Taxes (%): 20% (10% discount on original 30% applies until ParaInfo establishes a 50% equity holding.) Transfer Price on Input Units: $1 000
Transfer Price on Logic Units: $1 300
Royalty (%): 0%
JV Sale Price to Tanaka: $4 000
JV Sale Price to ParaInfo distributorship in Paradiso: $5 200 Term of Agreement: 6 year obligation

Intellectual Property Clause: Tanaka would maintain control over the microanalyser technology intellectual property. Buy-Back Clause: ParaInfo is required to use 40%-50% of its share of net income to buy back common shares from Tanaka until there is a 50%-50% split of shares between ParaInfo and Tanaka. Exclusivity Clause: ParaInfo agrees to only distribute for Tanaka and no other competitive entities throughout the duration of the agreement. Bankruptcy Clause: In the event that a partner enters bankruptcy, the other partner has a secured creditor status on the joint venture. Management Structure Clause: 50%-50% managers from ParaInfo and from Tanaka. This ensures that Tanaka’s quality standards can be enforced. Future Licensing Clause: If Tanaka chooses to sell or abandon the microanalyzer market, ParaInfo reserves the right to license the technology. Exit Clause: Neither party can exit the joint venture for the first 6 years. Thereafter, if Tanaka or ParaInfo wants to sell their interest in the joint venture, they are obligated to offer their shares to the other partner first.

Parties Involved:
Tropicalia & Megatronics
Entering into Tropicalia market as a whole owned subsidiary building 2 plants for next 4 years General Terms:
1. Components: import tariff 20% on products sold in the country 2. Intellectual Property
a. 25 years intellectual property with 25 year renewal
b. Draft legislation for prosecuting anyone who breaks patents 3. Entrance Strategy: Wholly-owned subsidiary direct Investment 2 plants in next 4 years a. 2 Maxi plants output and final assembly over 4 years, produce every other year 2,4 b. 70 million for output and assembly portion of plant

i. Spend on building material/equip 60% of costs = 42 million in Paradiso ii. In years 2,4 = 84 million
c. Job Creation
i. 1200/ year in years 2,4 = 2400 jobs
4. Commitment to country: 15 years
5. Protecting Locals: Max 75% market share cap for 5 years, no market cap after 5 years 6. Tax Rates
a. Corporate Tax Rate: 10% first 3, 20% for next 2, 30%
b. Dividend tax rate down to 10%

Parties Involved:
Paradiso and Megatronics
Entering into Paradiso market as a wholly-owned subsidiary building 3 plants for next 5 years General Terms:
1. Components: import remains tariffs 15% on products sold in the country 2. Intellectual Property:
a. 25 years intellectual property with 25 year renewal
3. Protecting Locals:
a. Megatronics will cap at 40% of Paradisio market, with option to negotiate after 5 years 4. Direct Investment:...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay about question answer
  • Questions & Answers Essay
  • Answers to Question Essay
  • Questions & Answers Essay
  • Question and answer Essay
  • Question and Answer Essay
  • Answer These Questions Essay
  • Essay on Questions and Answers

Become a StudyMode Member

Sign Up - It's Free