1. Why do you think tax rates are important to a firm’s financial decision making? Taxes are an important part of corporate finance that affect such wide-scale corporate decisions as profit and risk management.

In the United States, tax rates are the highest of developed countries at 25 to 40 percent.

Because higher taxes result in lower profits, corporations often look for ways to reduce their tax burdens. One option many multinational companies have taken is to move their legal dwelling place to a country that has lower tax rates.