4. Assume that A and B are two subsidiaries of company AB and that they are based in different countries. A is subject to a tax rate of 30% and B is subject to a tax rate of 10%. Also assume that A and B each make a profit of $20 when A sells a widget to B at a transfer price of $70. Use the table below to answer questions (a)-(j) and the space below the table to answer questions (k) and (l). [15]

1. Calculate the taxes paid by A at a transfer price of $70. [1]
2. Calculate the taxes paid by B at a transfer price of $70. [1]
3. Calculate the total taxes paid by AB at a transfer price of $70. [1]
4. Calculate the effective tax rate of AB at a transfer price of $70. [2]