Question: Minden Corporation wants to open a branch operation in Eastern
Minden Corporation wants to open a branch operation in Eastern Europe and must decide between locating the branch in either Country R or Country S. Labor costs are substantially lower in Country R than in Country S. For this reason, the Country R branch would generate $700,000 annual income, while the Country S branch would generate only $550,000 annual income. However, Country R has a 20 percent corporate income tax, while Country S has a 10 percent corporate income tax. On the basis of these facts, in which country should Minden locate its eastern European branch?
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