Identify the tax issues associated with the following scenarios concerning transfer prices.

Compania de Minerale is an Argentianian company which has 100% of its stock owned by U.S. Minerals, a domestic company. Compania recently discovered a huge supply of iron ore based on a mine it developed in Argentina. Compania is subject to an Argentinian income tax rate of 10% on its mining profits. Compania is required under Argentinian law to sell 20% of its mining output (the iron ore) to the Argentinian national steel company at $400/per ton. The price was set by the government without reference to market iron ore price. Compania also has a contract to sell 30% of its iron ore output to a private steelmaker in Brazil for $900/ton. The Brazilian purchaser will take ownership of the iron ore at the output of the mine in Argentina. The remining 50% of the output will be sold to its parent company, US Minerals for US Minerals to use in its US steel making operations. The iron ore will be transported via truck to plants in. Texas.

Identify some of considerations that should be taken into account in setting the transfer price with US Minerals.

Consumer Reportsprovided extensive testing and ratings for more than 100 HDTVs. An overall score, based primarily on picture quality, was developed for each model. In general, a higher overall score indicates better performance. The following (hypothetical) data show the price and overall score for the ten 42-inch plasma televisions (Consumer Reportdata slightly changed here):

Use the above data to develop and estimated regression equation and interpret the coefficients. Compute Coefficient of Determination and correlation coefficient and show their relation. Interpret the explanatory power of the model. Estimate the overall score for a 42-inch plasma television with a price of $3400. Finally, test the significance of the slope coefficient. (Note that you need to answer all parts of the question and provide necessary interpretations to get full points).

Question is from Eco 302.

a. In a competitive industry, the market-determined price is $12. For a firm currently producing 50 units of output, short-run marginal cost is $15, average total cost is $14, and average variable cost is $7. Is this firm making the profit-maximizing decision? Why or why not? If not, what should the firm do?

b. In a different competitive market, the market-determined price is $25. A firm in this market is producing 10,000 units of output, and, at this output level, the firm’s average total cost reaches its minimum value of $25. Is this firm making the profit- maximizing decision? Why or why not? If not, what should the firm do?

c. In yet another competitive industry, the market-determined price is $60. For a firm currently producing 100 units of output, short-run marginal cost is $50, average total cost is $95, and the average variable cost is $10. This firm also incurs total quasi- fixed costs of $7,000 (or $70 per unit). Is this firm making the profit-maximizing decision? Why or why not? If not, what should the firm do? (Hint: You will need to compute total avoidable cost

3) Perfectly competitive markets

# of Contraptions

Total Cost

0. 0 500

1. 1 580

2. 2 640

3. 3 690

4. 4 730

5. 5 760

6. 6 800

7. 7 850

8. 8 950

9. 9 1200

10. 10 2000
    c) If market price equals $100, how many units should be produced? What is revenue? What is profit? Add these columns to your Table too. d) What is the fixed cost? Would the number of units produced change if the fixed cost went down? Why or why not?

e) Firms now exit the contraption market, and contraption price goes up to $250. Graph this result, showing market and firm graph side by side. How many units will a firm with the above cost function produce? What will profit be? (It might be helpful to show a new Table or at least add a couple of columns to the existing one).

f) At this point, will more firms exit, or will new firms start to enter the market? Explain.
g): What is the long run equilibrium price? What is profit? (Show all calculations) Why will firms not leave the market?

Ignite Products is a

price−taker.

The company produces large spools of electrical wire in a highly competitive​ market; thus, it uses target pricing. The current market price of the electric wire is

$700

per unit. The company has

$3,100,000

in average​ assets, and the desired profit is a return of

9​%

on assets. Assume all products produced are sold. The company provides the following​ information:

If fixed costs cannot be​ reduced, how much reduction in variable costs will be needed to achieve the desired​ target?

A.

$12,000,000

B.

$7,879,000

C.

$279,000

D. 72,600,000

2)

​Psari's, a company that sells fishing​ nets, provides the following information about its​ product:

What is the contribution margin​ ratio? (Round any intermediate calculations and your final answer to two decimal​ places.)

A.

100​%

B.

25​%

C.

75​%

D.

125​%

a. Assume that you would like to buy 100 shares of a stock that is currently priced at $ 70. The initial margin is 75% and maintenance margin is 35%.

How much would the total purchase amount to in dollars.

How much in total cash of your own do you need in dollars in this example?

How much will you be able to borrow in dollars in this example?

b. Show your total dollar amount of investment and your results in table below.

c. Calculate the margin for this case.

d. If the market value of the stock falls to $ 60 (from a that was 70) after one year, provide a new balance sheet

e. Calculate the margin for this case.

f. If the market value of the stock further falls to $ 40 (from a that was 70) after one year, provide a new balance sheet

g. Calculate the margin for this case.

True/False for the following:

1) Venture capitalists rely on preferred stock in a company to skew investment returns in their favor relative to the owners of the common stock, gain a disproportionate level of control of key decisions relative to the common shareholders and ensure that their interests are aligned with the founders.

2) When a subsequent round of financing takes place at a lower price per share than previous round of financing; existing shareholders would suffer from the dilution of their ownership stake. If the existing shareholders required a clause in the terms of their financing that would obligate the company to offer them additional shares when subsequent shares are issued at a lower price than the paid is an example of an anti-dilution clause.

3) A Drag-Along clause in a term sheet will address the rights of shareholders who control a majority of shares relative to shareholders who control a minority of shares.

4) Use the “YIELD” function in Excel to find the yield to maturity of a bond with the following characteristics. The yield to maturity on this bond is over 7%