Question
Lardo Inc. plans to build a new manufacturing plant in either Country X or Country Y. It projects gross revenue in either location of $4
Lardo Inc. plans to build a new manufacturing plant in either Country X or Country Y. It projects gross revenue in either location of $4 million per year. Operating expenses would be $1.5 million in Country X and $1.8 million in Country Y. Country X levies income tax at a rate of 20 percent on net business income. Country Y does not have an income tax, but assess a 10 percent tax on gross revenue, without allowance for any deductions.
a. Calculate the after-tax profit for each country. (Enter your answer in dollars not in millions. Deductions should be indicated by a minus sign. Round your intermediate calculations and final answers to the nearest whole dollar amount.)
Country X:
|
Country Y:
|
b. In which country should Lardo build its new plant?
Country X | |
Country Y |
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