A New Project Is Projected to Yield $2

question 15

Multiple Choice

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

Understand the concept of euphemisms and their impact on message clarity and perception.

Grasp the importance of credibility in communication and how it is established.

Realize the potential biases in language and the importance of avoiding them.

Appreciate the role of formal and conversational tones in business communication and when each is appropriate.