Suppose an MNC subsidiary buys 100 input units from its parent at a price of $2 each.It has $300 in additional production costs,and sells its 100 units of output for $6 to the MNC.It pays a 25% local profit tax.The MNC sells the output at home for $8,and its cost of producing inputs is $1.It pays a profit tax of 20% at home on repatriated profits.What is the subsidiary net profit? Assume no selling costs at home.What is the MNC's total profit from the operation?

Question

Quizplus · Accepted Answer

The Answer of Suppose an MNC subsidiary buys 100 input units from its parent at a price of $2 each.It has $300 in additional production costs,and sells its 100 units of output for $6 to the MNC.It pays a 25% local profit tax.The MNC sells the output at home for $8,and its cost of producing inputs is $1.It pays a profit tax of 20% at home on repatriated profits.What is the subsidiary net profit? Assume no selling costs at home.What is the MNC's total profit from the operation?

Suppose an MNC Subsidiary Buys 100 Input Units from Its