Calculate the after-tax rates for both states

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Reference no: EM133261380

Hyundai is considering opening a plant in two neighboring states. One state has a corporate tax rate of 10 percent. If operated in this state, this plant is expected to generate $1,000,000 pretax profit. The other state has a corporate tax rate of 2 percent. If operated in this state, the plant is expected to generate $930,000 of pretax profit. Which state should Hyundai choose? Why do you think the plant in the state with a lower tax rate would produce a low before-tax income?

Please show calculations of the after-tax rates for both states.

Reference no: EM133261380

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