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 $1,125,000 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 $1,080,000 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? Option 1 or Option 2