For a parent that sells goods to a subsidiary, transfer pricing can have an effect on international capital expenditure analysis. A very low markup policy makes the APV of a subsidiary's capital expenditure appear

Question

Quizplus · Accepted Answer

A very low markup policy reduces the costs for the subsidiary, increasing its net income and cash flows, which makes the Adjusted Present Value (APV) of its capital expenditure appear more attractive.

For a Parent That Sells Goods to a Subsidiary, Transfer