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The management of Nixon Company must decide between locating a new branch office in foreign Jurisdiction F or foreign Jurisdiction G. Regardless of location,
The management of Nixon Company must decide between locating a new branch office in foreign Jurisdiction F or foreign Jurisdiction G. Regardless of location, the branch operation will use tangible property (plant and equipment) worth $13.8 million and should generate annual gross receipts of $3.9 million. Jurisdiction F imposes an annual property tax of 4 percent of the value of business property and a 15 percent gross receipts tax. Jurisdiction G imposes no property tax but imposes a 30 percent gross receipts tax. Required: a. Compute the tax costs of operating in both jurisdictions. b. Solely on the basis of these facts, should Nixon locate its new branch in Jurisdiction F or Jurisdiction G? Complete this question by entering your answers in the tabs below. Required A Required B Compute the tax costs of operating in both jurisdictions. Note: Enter your answers in dollars not in millions of dollars. Jurisdiction F Jurisdiction G Tax Cost of Operating
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