Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 4, Problem 15AP
Lardo Inc. plans to build a new manufacturing plant in either Country X or Country Y. It projects gross revenue in either location of $4 million per year. Operating expenses would be $1.5 million in Country X and $1.8 million in Country Y. Country X levies income tax at a rate of 20 percent on net business income. Country Y does not have an income tax, but assesses a 10 percent tax on gross revenue, without allowance for any deductions. In which country should Lardo build its new plant?
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Hyundai is considering opening a plant in two neighboring states.
Option 1: One state has a corporate tax rate of 10 percent. If operated in this state, the plant is expected to generate $1,250,000 pretax profit.
Option 2: The other state has a corporate tax rate of 2 percent. If operated in this state, the plant is expected to generate $1,180,000 of pretax profit.
Required:
What is the after-state-taxes profit in the state with the 10% tax rate?
What is the after-state-taxes profit in the state with the 2% tax rate?
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(Click the icon to view the options.)
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If Taxable Income ($) Is:
But Not
Of the
Over
over
Тax Is
Amount over
50,000
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50,000
75,000
7,500 + 25%
50,000
75,000
100,000
13,750 + 34%
75,000
100,000
335,000
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100,000
335,000
10,000,000
113,900 + 34%
335,000
10,000,000
15,000,000
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10,000,000
15,000,000
18,333,333
5,150,000 + 38%
15,000,000
18,333,333
35%
The equivalent after-tax ROR is determined to be
%.
Chapter 4 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
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Ch. 4 - Identify the reasons why managers should evaluate...Ch. 4 - Prob. 12QPDCh. 4 - Prob. 13QPDCh. 4 - Prob. 14QPDCh. 4 - Using the 2019 corporate tax rate: a. What are the...Ch. 4 - Refer to the individual rate schedules in Appendix...Ch. 4 - Refer to the individual rate schedules in Appendix...Ch. 4 - Ms. JK recently made a gift to her 19-year-old...Ch. 4 - Firm A has a 21 percent marginal tax rate, and...Ch. 4 - Prob. 6APCh. 4 - Prob. 7APCh. 4 - Firm M and Firm N are related parties. For the...Ch. 4 - Company K has a 30 percent marginal tax rate and...Ch. 4 - Firm H has the opportunity to engage in a...Ch. 4 - What is the effect on the NPV of the restructured...Ch. 4 - French Corporation wishes to hire Leslie as a...Ch. 4 - Corporation R signed a contract to undertake a...Ch. 4 - Prob. 14APCh. 4 - Lardo Inc. plans to build a new manufacturing...Ch. 4 - Prob. 16APCh. 4 - Prob. 17APCh. 4 - Prob. 18APCh. 4 - Prob. 19APCh. 4 - Prob. 20APCh. 4 - Refer to the facts in the preceding problem. At...Ch. 4 - For each of the following scenarios, indicate...Ch. 4 - Assume that Congress amends the tax law to provide...Ch. 4 - Firm L has 500,000 to invest and is considering...Ch. 4 - Prob. 1IRPCh. 4 - Mr. and Mrs. K own rental property that generates...Ch. 4 - Prob. 3IRPCh. 4 - Prob. 4IRPCh. 4 - Prob. 5IRPCh. 4 - Prob. 6IRPCh. 4 - Prob. 7IRPCh. 4 - Firm HR is about to implement an aggressive...Ch. 4 - Prob. 1TPCCh. 4 - Prob. 2TPCCh. 4 - Prob. 3TPCCh. 4 - Ms. Z has decided to invest 75,000 in state bonds....
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