Which of the Following Is a Reason for a Parent

question 30

Multiple Choice

Which of the following is a reason for a parent to use discretionary transfer prices?

• A) Improve competitive position of foreign operation
• B) Minimize import duties
• C) Avoid restrictions on repatriation of profits
• D) All of the above

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Definitions:

Internal Rate of Return

A financial metric that estimates the profitability of potential investments by calculating the discount rate that makes the net present value of all cash flows from a project equal to zero.

Internal Rate of Return

The discount rate at which the net present value of all cash flows from a project equals zero, used to assess the profitability of potential investments.

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.

Net Present Value

A financial metric that calculates the present value of an investment's expected cash flows minus the initial investment cost.