Suppose affiliate A sells 10,000 chips monthly to affiliate B at a unit price of $15. Affiliate
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Suppose affiliate A sells 10,000 chips monthly to affiliate B at a unit price of $15. Affiliate A’s tax rate is 45%, and affiliate B’s tax rate is 55%. In addition, affiliate B must pay an ad valorem tariff of 12% on its imports. If the transfer price on chips can be set anywhere between $11 and $18, how much can the total monthly cash flow of A and B be increased by switching to the optimal transfer price?
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Related Book For
Foundations Of Multinational Financial Management
ISBN: 9780470128954
6th Edition
Authors: Alan C Shapiro, Atulya Sarin
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