Why it is c ?

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%. -$500,000, +$500,000 -$300,000, +$330,000 -$300,000, +$321,000 +$500,000, -$500,000 Ans: c