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 $1,360,000 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 $1,300,000 of pretax profit.

a. What is the after state taxes profit in the state with the 10% tax rate?

b. What is the after state taxes profit in the state with the 2% tax rate?

c. Which state should Hyundai choose?

multiple choice

• Option 1

• Option 2