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Requlred: Affillate A sells 8,000 units to Affillate B per year. The marginal Income tax rate for Affillate A is 25 percent and the marginal
Requlred: Affillate A sells 8,000 units to Affillate B per year. The marginal Income tax rate for Affillate A is 25 percent and the marginal Income tax rate for Affillate B is 40 percent. The transfer price per unit is currently $2,000, but It can be set at any level between $2,000 and $2,400. Derlve a formula to determine how much annual after-tax profits can be increased by selecting the optimal transfer price. Note: Do not round Intermedlate calculations
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