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RCo, a transnational company sets a wholly owned subsidiar SubA in coun try X, X's income tax rate is 25%, withholding tax rate is 10%. Two choices to invest to its SubA: (A) RCo invested 1500 into SubA. (As equity investment) (B) Lend 1500 to SubA, the interest rate is 12%. (As credit investment) Assume that SubA's yearly income is 1200 and expenses are 500 before t his investment. The amount of dividend paid to RCo. is 180. Required: (1) Compute the total group's total tax burden under the above two choic es. (2) Compare the two results and then explain why there are différent result s of total tax in different investments. (unit: $thousand) RCo, a transnational company sets a wholly owned subsidiar SubA in coun try X, X's income tax rate is 25%, withholding tax rate is 10%. Two choices to invest to its SubA: (A) RCo invested 1500 into SubA. (As equity investment) (B) Lend 1500 to SubA, the interest rate is 12%. (As credit investment) Assume that SubA's yearly income is 1200 and expenses are 500 before t his investment. The amount of dividend paid to RCo. is 180. Required: (1) Compute the total group's total tax burden under the above two choic es. (2) Compare the two results and then explain why there are différent result s of total tax in different investments. (unit: $thousand)
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Answer rating: 100% (QA)
A Particulars Option A Option B Total Income 1200 1200 Less Expenses 50... View the full answer
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Posted Date:
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