Global Giant,a Multinational Corporation,has a Producing Subsidiary in a Low

question 19

Multiple Choice

Global Giant,a multinational corporation,has a producing subsidiary in a low tax rate country and a marketing subsidiary in a high tax country.If Global Giant wants to minimise its worldwide tax liability,we would expect Global Giant to:

• A)stop marketing in the high tax rate country.
• B)stop producing in the low tax rate country.
• C)establish a high transfer price when the producing unit sells to the marketing unit.
• D)establish a low transfer price when the producing unit sells to the marketing unit.

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Definitions:

Year 0 Value

Year 0 Value is a reference point in financial analysis indicating the value of an investment or project at the beginning period before any growth or decline.

Weighted Average

Weighted average is a calculation that takes into account the varying degrees of importance of the numbers in a data set.

Free Cash Flows

The amount of cash generated by a business that is available for distribution to its securities holders after capital expenditures.

Year 0 Value

A reference to the initial value or investment amount at the beginning of a project or investment period, often used in financial analysis.