The Pricing of Goods, Services, and Technology Transferred to a Foreign

question 43

Essay

The pricing of goods, services, and technology transferred to a foreign subsidiary from an affiliated company, transfer pricing, is the first and foremost method of transferring funds out of a foreign subsidiary. When engaged in transfer pricing managers must consider at least two basic factors; Fund Positioning Effect and the Income Tax Effect. Explain each of these effects.

Calculate a firm’s average total cost given production figures.

Analyze a firm’s decision-making process in relation to average and marginal costs to determine optimal production levels.

Recognize and explain the phenomena of economies of scale and diseconomies of scale.

Identify explicit and implicit costs in business operations and their impact on profit calculation.

---

Definitions:

NPV

Net Present Value, a calculation used to assess the profitability of an investment by summing the present values of its cash inflows and outflows.

Mutually Exclusive

Describes options or decisions that cannot be adopted or pursued at the same time.

Management Accept

The process of corporate leadership approving strategies, initiatives, or decisions based on their alignment with the organization's objectives and resource capabilities.

Required Rate of Return

The lowest yearly return rate on an investment that appeals enough to persuade people or corporations to invest in a specific venture or financial opportunity.