Use the Information to Answer the Following Question(s)

question 2

Multiple Choice

Use the information to answer the 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 20.1. If the U.S. treated the taxes paid on income earned in the host country as a tax-deductible expense, then Rogue River's total U.S. corporate tax on the foreign earnings would be ________.

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

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Definitions:

Present Values

The today's worth of a future cash amount or cash flow series, determined by a given rate of return.

Discounting

The process of determining the present value of future cash flows by applying a discount rate, reflecting the time value of money.

Compounding

The process in which the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes.

Effective Annual Rates

The interest rate on a loan or financial product restated from the nominal rate as an annual rate that accounts for compounding over a given period.