Setting the transfer price

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Assume that a multinational corporation (MNC) is (i) shipping product from Brazil (Country B) to Australia (Country A), and (ii) the tax rate in Country B < tax rate in country A, in answering the following questions:

-If MNC managers wish to minimize (taxes + tariffs), how should they go about setting the transfer price. [Use a graph to motivate your answer]

-If MNC managers wish to minimize (taxes), how should they go about setting the transfer price [Provide thumb-rules as part of your answer]

-If MNC managers wish to minimize (tariffs), how should they go about setting the transfer price [Indicate which country imposes the tariffs]

Provide reasons for each of your answers.

Reference no: EM133077358

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