Use the Information to Answer the Following Question(s)

question 27

Multiple Choice

Use the information to answer the following question(s) .
Green Valley Exporters USA has $100,000 of before tax foreign income. The host country has a corporate income tax rate of 25% and the U.S. has a corporate income tax rate of 35%.
-Refer to Instruction 15.1.If the U.S.has a bilateral trade agreement with the host country that calls for the total tax paid to be equal to the maximum amount that could be paid in the highest taxing country,what is the total amount of income taxes Green Valley Exporters will pay to the host country,and how much will they pay in U.S income taxes on the foreign earned income?

• A) $25,000; $10,000
• B) $25,000; $26,250
• C) $35,000; $0
• D) none of the above

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Definitions:

Compounded Monthly

The process of calculating interest on both the initial principal and the accumulated interest from previous periods on a monthly basis.

Simple Interest

Interest calculated only on the principal amount, or on that portion of the principal amount which remains unpaid.

Compounded Daily

A method of calculating interest where the interest amount is added to the principal sum at the end of each day, leading to interest earned on interest.

Compounded Monthly

The process of adding interest to the principal sum of a deposit or loan, with the effect that interest is then earned on the interest from the previous period.