Question: Please help me out in responding to the following: Based on the information from the text, Havel Robotics Company, would get a $15 profit per
Please help me out in responding to the following:
Based on the information from the text, Havel Robotics Company, would get a $15 profit per unit ($50/unit - $35/unit) being in the U.S. If they decided to choose this investment and produce the robots in China, they would get $23 profit per unit ($15 + $8) One consideration that the Havel Robotics Company should take into account is about the tax rate between the United States versus China. The corporate income tax rates in China and the United States are 25 percent and 21 percent, respectively (Doupnik et. al, 2020). This tax rate in China is higher than the United States. In the long run, the Havel Robotics Company would be paying more in taxes than if they decided to not choose the investment. I wouldnt recommend the investment.
If the Havel Robotics Company doesnt invest in China, and a German company would want to make a similar investment, we need to also consider Germanys corporate tax rate. Germanys corporate tax rate is 30% (Trading Economics, n.d.)., which is still higher than the United States tax rate. If there was a choice between China and Germanys tax rate, I would suggest going with the investment, based on the tax rates alone.
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