Boeing is considering opening a plant in two neighboring states.One state has a corporate tax rate of 15%.If operated in this state,the plant is expected to generate $1,200,000 pre-tax profit.The other state has a corporate tax rate of 5%.If operated in this state,the plant is expected to generate $1,085,000 of pre-tax profit.Which state should Boeing choose based upon tax considerations only? Why do you think the plant in the state with a lower tax rate would produce a lower pre-tax income?

Question

Quizplus · Accepted Answer

The Answer of Boeing is considering opening a plant in two neighboring states.One state has a corporate tax rate of 15%.If operated in this state,the plant is expected to generate $1,200,000 pre-tax profit.The other state has a corporate tax rate of 5%.If operated in this state,the plant is expected to generate $1,085,000 of pre-tax profit.Which state should Boeing choose based upon tax considerations only? Why do you think the plant in the state with a lower tax rate would produce a lower pre-tax income?

Boeing Is Considering Opening a Plant in Two Neighboring States