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Your electronics company has branches in Hong Kong and Mexico. Currently, you manufacture a circuit board for your radios in Hong Kong, and you complete

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Your electronics company has branches in Hong Kong and Mexico. Currently, you manufacture a circuit board for your radios in Hong Kong, and you complete the radio manufacture at your Mexican plant. Corporate tax rates are 20% in Hong Kong, and 40% in Mexico. Radios sell for $50, and the Mexican plant has $20 in costs per radio besides the cost of the circuit board. Your Hong Kong plant has costs of $10 per circuit board. Your lawyers inform you that any transfer price between $11 and $20 would probably be allowed. (15 pts) a) What transfer price do you choose to maximize after tax profits? How large will profits be per radio? b) If Mexico imposes a 50% tariff what transfer price do you choose to maximize after tax profits? How large will profits be per radio

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