Transfer Pricing/Tax Games (6 points) Apple Computers produces the Iphone in China where the corporate income tax rate is 25 percent. The multinational enterprise ships the Iphone to its Irish division. The Irish corporate income tax rate is 12.5 percent. The Irish subsidiary pays for the shipping costs and pays heavily for advertising and distribution of the Iphone. More Facts: *The initial sale price of the Iphone is $200 per unit from the Chinese to the Irish subsidiary, which the firm is ready to change. The final sale price in Ireland to consumers is $400 (which is fixed). *Cost to produce in China is $125 per unit. *The cost of shipping, advertising and distribution for the Irish subsidiary is $125 per unit. (1) Assume it sells 3 million iphones a year. Compute the after tax profits if it chooses a transfer price between these two business units that minimizes its taxes. (2) Assume it sells 3 million iphones a year. Compute the after tax profits if it chooses a transfer price between these two business units that maximizes its taxes. "The continuing story of e" (4 Points)