Answer:
Lahdekorpi OY, a Finnish corporation and Three-O Company, a subsidiary incorporated in the United States
Transfer Pricing:
a) The best transfer pricing method in this case is the cost plus method. This gives the transfer price as Cost + 50%.
b) The appropriate transfer price should be $3 ($2 x 1.5).
Explanation:
Transfer pricing arises when controlled entities set prices for exchange of goods and services. When Lahdekorpi OY, a Finnish corporation, sells wooden puzzles to Three-O Company, given their relationship, transfer pricing has arisen. It is the assignment of cost for goods and services exchanged between related parties, like a parent and a subsidiary.
There are many Transfer Pricing methods which entities and the taxing authorities can use to determine the best transfer price. According to the Organisation for Economic Co-operation and Development (OECD) Multinational Entities and tax authorities can use any of these five main transfer pricing methods:
a) Comparable uncontrolled price (CUP) method. The CUP method is grouped by the OECD as a traditional transaction method (as opposed to a transactional profit method)
b) Resale price method
c) Cost plus method
d) Transactional net margin method (TNMM)
e) Transactional profit split method.
Demand supply and market equilibrium will have many changes due to change in the quantity of a supplied product.
The reason is <span>Marketing research is expensive.
</span>The established firm usually has a large amount of capital at its disposal, so they could do market research in order to strengthen their position.
Small business on the other hand, usually struggle to even barely continuing their operation for the next month.
Answer:
$50
Explanation:
Dividend discount model (DDM) is used to calculate intrinsic value of a stock. Since the dividends are expected to grow indefinitely, the formula will be as follows;
Price (P0) = D1 / (r-g)
where D1 = Next year's dividend = 2.50
r = required rate of return = 12% or 0.12 as a decimal
g = dividend growth rate = 7%
Price (P0) = 2.50/(0.12-0.07)
P0 = 2.50 /0.05
P0 = $50
