Win, a U.S. manufacturing corporation, is planning to build a new production facility, and has narrowed down the possible sites for this new plant to either Country A (a low-tax foreign country) or Country B (a high-tax foreign country). Win will organize the new entity owning the facility as a wholly-owned foreign subsidiary, WinFco, and finance it solely with an equity investment. Win projects that WinFcos results during its first year of operations will be as follows:

Sales..................................................................................... $200,000

Cost of goods sold................................................................ ($145,000)

Selling, general, and administrative expenses........................ ($30,000)

Income before income taxes.................................................... $25,000

Assume Country As tax rate is 10%, the United States corporate tax rate is 21%, and Country Bs rate is 30%. Further assume that neither Country A nor Country B imposes withholding taxes on interest or royalty payments paid by a local subsidiary to its U.S. parent company. Compute the total tax rate (United States plus foreign) on WinFcos profits under the following assumptions:

1. The new production facility is located in Country A.
2. The new production facility is located in Country B.
3. The new production facility is located in Country B, but Win decides to finance WinFco with both debt and equity, such that WinFco will pay Win $12,000 of interest each year. Biz will also charge WinFco an annual royalty of $5,000 for the use of WinFcos patents and trade secrets.