A new project is projected to yield $2.5 million annually in after-tax profit, based on a local

corporate profit tax rate of 40%. However, this profit figure depends on the use of a transfer price

of $30 per unit on a component bought from the parent. If the project requires 100,000 units of

this component annually, the impact on project profitability and on parent profitability of a boost

in the transfer price to $35 will be _______ and ________, respectively. The parent's marginal

tax rate is 34% and the incremental tax on subsidiary remittances to the parent is -3%.

a)

-$500,000, +$500,000

b)

-$300,000, +$330,000

c)

-$300,000, +$321,000

d)

+$500,000, -$500,000

please provide worked solutions thank you!!