Boeing Is Considering Opening a Plant in Two Neighboring States

question 60

Essay

Boeing is considering opening a plant in two neighboring states. One state has a corporate tax rate of 15%. If operated in this state, the plant is expected to generate $1,200,000 pre-tax profit. The other state has a corporate tax rate of 5%. If operated in this state, the plant is expected to generate $1,085,000 of pre-tax profit. Which state should Boeing choose based upon tax considerations only? Why do you think the plant in the state with a lower tax rate would produce a lower pre-tax income?

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Definitions:

Pyrimidines

One of the two types of nitrogenous bases found in nucleic acids, including cytosine, thymine (in DNA), and uracil (in RNA).

Mental Impairment

A reduction in cognitive, emotional, or behavioral functioning, which may affect daily living and can be temporary or permanent.

Nondisjunction

Failure of the homologous chromosomes or sister chromatids to separate during either mitosis or meiosis; produces cells with abnormal chromosome numbers.

Homologous Chromosomes

Pair of chromosomes that have the same gene sequences, each derived from one parent.