Instruction 21.1: Use the Information to Answer Following Question(s)

question 22

Multiple Choice

Instruction 21.1:
Use the information to answer following question(s) .
Rogue River 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 21.1. If the U.S. treated the taxes paid on income earned in the host country as a tax-credit, then Rogue River's total U.S. corporate tax on the foreign earnings would be ________.

• A) $51,250
• B) $35,000
• C) $26,250
• D) $10,000

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Definitions:

Specific Risk

Risk associated with individual investments or a small group of assets, distinct from market risk.

Two-factor Model

A Two-factor Model in finance is an asset pricing model that uses two variables to calculate the value of an asset or the expected return.

Commodity Prices

The market prices for raw materials or primary agricultural products.

Market Risk

The risk of losses in investments due to factors that affect the entire market or economy.