Prove that when the foreign tax rate exceeds the domestic rate, foreign investment is preferred to domestic

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Prove that when the foreign tax rate exceeds the domestic rate, foreign investment is preferred to domestic investment, for any investment horizon, if and only if the after-local tax rate of return abroad exceeds the after-tax rate of return at home, rf > rd. Also prove that the same condition determines whether reinvestment abroad is preferred to repatriation of foreign earnings and profits.
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Taxes And Business Strategy A Planning Approach

ISBN: 9780132752671

5th Edition

Authors: Myron Scholes, Mark Wolfson, Merle Erickson, Michelle Hanlon

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