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JDR Inc. has $100 million invested in country Z, which taxes corporate income at 20%. The investment in country Z generates 7.5 percent return before
JDR Inc. has $100 million invested in country Z, which taxes corporate income at 20%. The investment in country Z generates 7.5 percent return before tax and 6 percent after (computed as .8*7.5). JDR's home country imposes a 35 percent tax rate. What return would the company need to be able to generate before tax in its home country in order to earn the same after-tax return that it earns in country Z?
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