USAco, a domestic corporation, purchases musical instruments from its foreign parent, FORco, for $900 and resells them to U.S customers for $1,000. A search of available information for independent U.S. distributors of musical instruments shows that the independent U.S. distributors earn a profit on resales (expressed as a percentage of the resale price) of 20%. Under the resale price method, the arms length price that USAco should pay FORco for musical instruments is:

Question 19 options:

1)

$1000.

2)

$900.

3)

$800.

4)

$720.