Transfer Pricing Essay Example | Topics and Well Written Essays - 1250 words

Transfer Pricing - Essay Example It is usually applied when bodies are separate entities and are individually responsible for their profitability and divisions are accountable for their own profits (Jensen and Meckling, 1976, 315). Since transfer pricing is an agreement between two divisions of same group there is greater chance of conflict of interest as both buying and selling side try to transfer to counter party resulting increased benefit to its division (Chan, Landry, and Jalbert , 2004, 39). This report will also analyze a case between Millwall Company and Reading Company as both these companies are interested in buying and selling with each other and both of these companies belong to the same group of companies. EFEFCTOF EACH PROPOSED PRICE ON MANAGEMENT OF READING The transfer price mechanism is the source of revenue for selling division which in this case is Reading Company and cost for buying division which in mentioned case is Millwall Company. Former aims to get it maximum revenue from deal and latter t ries to get supply at minimum cost. The best option can, therefore, be negotiated at point where both firms are given autonomy as finally they will be held responsible for the profitability of the respective divisions (Grubert and Joel Slemrod , 1998, 368). Considering the fact that Reading Company is already performing under capacity, therefore, it can serve Millwall Company without reducing its supply to other external suppliers and so no opportunity cost would be involved in this scenario. With these assumptions, standard variable cost and opportunity cost would be the total cost that it has to incur. Since opportunity cost is nil in this case then standard variable cost constitutes main component of cost and any point above this would be the profit. Using its spare capacity, selling at any price over and above the average variable price would increase the profit for Reading Company by same amount. For instance, Profit for Reading company = (selling price – average variabl e price) * quantity In the given case price demanded by Reading Company is inclusive of fixed cost as well and only selling and distribution cost is foregone. It is in due alignment with the need of Reading Company as it has to keep profitability improved with its operation under capacity. Offer from Millwall Company is true on its part as it is well calculated from buyer’s current condition of operating under capacity and it would like to pay minimum or at least less than what it would pay to an external supplier to improve its profitability. But management of Reading Company would surely not like this scenario as it would not benefit the profitability of the company as selling the same product to an external buyer give the company revenue of $ 13per unit. Supplying on the price given by Millwall Company would only then improve the profitability of Millwall Company and this can raise an intra-company conflict of interest and reduction in its revenue will reduce its profit. T he best Reading Company is ready to forego its profit by $1.20, which is the market selling price less price offered to Millwall Company. For the price offered by management is less than the one asked by Reading company. This price has already covered the cost and the margin that is suggested to be foregone and it is higher than the Reading’s acceptable price. This price is also not considered suitable for overall profitability of group as it would yield a profit of $ 3 per unit (price: $13 – cost $10) if sold to outsider and this management’s suggested price would reduce the profit of overall group by $2.88 (13- 10.12) and loss in profit is $1.68 (11.80- 10.12) above than profit Reading company is ready to forego. In point of ROI comparison Reading company would finally be held for less profitability overall.

Land Law Essay Example | Topics and Well Written Essays - 1500 words - 7

Land Law - Essay Example Land law looks after people’s conflicting and competing interest to the land. There are circumstances that people share title to the land. Sometimes people have rights over land that is owned by another. A freeholder may have the legal right to the land however he does not have the legal right to posses or use or even access the land (FindLaw ____). Land law in England can sometimes be complex and so are the scenario presented with this paper. According to Land Registry Practice Guide 8, a deed is very important when it comes to dealing with land. There are only few exemptions to this, but in general a legal interest over a land cannot be established or conveyed without a deed (s.52 (1), LPA 1925). A deed has to have the following elements in order to be accepted legally as Deed: It must be very clear on its face that it is a deed that the person or parties that are making it are indeed making it to be a deed. This can be done by calling, entitling, or describing the document as it is and to be executed as a deed. A signature must be properly affixed to a document executed as deed (s.1 (4), LP (MP) A 1989). The name of the person to whom the deed is being executed must appear on the document, and the signature must properly be affixed to it. The same should be true with the person or parties executing the deed with names appearing on the document indicating all the signatories of the said document. Attestation – a deed should show proper attestation or witnessing. A deed must be signed in front of a witness who attests the signature (s.1 (3), LP (MP) A 1989). The address of the witness must be provided in order for the witness to be located in case the need arises. There are two kinds of a leasehold title: the absolute and the good leasehold. To be able to hold a leasehold title, the person must first own the lease and second, it must be rewarded or

Fracture of Ice Term Paper Example | Topics and Well Written Essays - 2500 words

Fracture of Ice - Term Paper Example Ice consists of hydrogen and oxygen atoms. Water molecule has four nearest neighbors arranged near the vertices of regular tetrahedron centered about the molecule of interest. Oxygen atom of each molecule is strongly covalent bonded to two hydrogen atoms while molecules are weakly hydrogen bonded to each other. Like any other crystalline solid, ice is subject to stress undergoes elastic deformation returning to its original shape when the stress ceases or stops. If the shear stress or force is applied to a sample of ice for a long time, the sample will first deform plastically with permanent alteration of shape or simply change in shape. Plastic deformation or creep is of rather great importance in the study of glacier flow. It involves generally processes like intra-crystalline gliding in which layers within an ice crystal shear parallel to each other without destroying the continuity. During an ice structure interaction, area of high pressure form (HPZs). The HPZs are not linearly distributed across the area of interaction and varies in intensity and location in respect with time. Their formation is critical in evolution of interaction. When HPZs form near the edge of an ice sheet, they can precipitate large-scale fracture and sparling events. This hence reduces both load felt by the structure and ice sheet. Formation of the HPZs causes creation of layer damage. This layer contains fine grains that are as a result of a combination of processes such as recrystallization and micro-cracking. Pre-existing flaws within the ice may also play a role in scale effect. In nature, ice contains many flaws which may either be in form of large cracks and leads, entrained air bubbles or dirt and irregular grain size as well as composition. Point defects- Hydrogen and oxygen appear to have the same diffusion coefficient in ice, implying that the

Strategic Corporate Finance Mod 5 Case Assignment Essay

Strategic Corporate Finance Mod 5 Case Assignment - Essay Example Net Present Value (NPV) method is one of the most important methods used to make capital budgeting decisions by businesses today. NPV method is important because it helps financial managers maximize shareholders’ wealth by making better capital budgeting decisions. Basically we can determine whether a project is worth investing in or not by comparing the present value of inflows and outflows discounted at the rate of cost of capital. If the PV of net flows is positive (PV of inflows is more than the PV of outflows over the life of the project), we consider it a good investment because it will increase shareholder wealth, and vice versa. In other words, must have a positive net inflow. In the given scenario, T-Mobile Corporation is considering a new project that will cost $3,219,000. This is the initial cash outflow. The company has provided the following cash flow figures: Year Cash Flow 0 -$3,219,000 1 350,000 2 939,000 3 1,122,000 4 500,000 5 400,000 We are told that T-Mobil e’s cost of capital discount rate is 4%, and are required to calculate the project's net present value. PV of Cash Inflows = 350000/(1.04)1 + 939000/(1.04)2 + 1122000/(1.04)3 +500000/(1.04)4 + 400000/(1.04)5 350000/1.04 + 939000/1.0816 + 1122000/1.1248 + 500000/ 1.1698 + 400000/ 1.2166 336538.46 + 868158.28 + 997510.66 + 427423.49 + 328785.13 $2,958,416.02. NPV= PV of Inflows – PV of Outflows NPV =$2,958,416.02 – 3,219,000 NPV= (260,583.98) Since the NPV is negative, or the PV of inflows is less than the PV of outflows for the project, investing in it will decrease shareholder wealth. The investment opportunity should be rejected. Even at the higher discount rate of 6%, the PV of inflows would decrease further, and the decision would be the same i.e. it is better not to invest here. Part II: T-Mobile-Sprint Merger Mergers and acquisitions are usually the two routes chosen by corporate entities to expand their businesses in the marketplace. These are often a hot topic in the business press (McClure, 2011). One rumor being floated around is a potential merger between mobile phone giants T-Mobile and Sprint. Mergers between two large companies are usually complicated, even though there may be possible synergies in 4G technologies that might be possible in such an instance. While mergers can bring about great rewards, at the same time they can also entail great risks and pitfalls. Differences in valuation, differences in accounting procedures and operational and administrative difficulties may emerge (Gaughan, (2001). This part of the assignment asks us to do some research concerning the arguments both for and against such a merger from a financial perspective. We are considering the deal from the point of view of whether or not such a merger would be a profitable undertaking that would add value to the shareholders of both corporations or not. Do you think a merger between Sprint and T-Mobile would add value to the shareholders of both corpor ations? Based on your analysis and findings (Part I and Part II), what would you recommend to the shareholders of both corporations? Should both companies merge? Please explain your reasoning. From the point of view of synergistic benefits, there is certainly a lot of merit in seeking to merge Sprint and T-Mobile. As of the date of the article in July 2010, both Sprint

Outline of three ideas Essay Example | Topics and Well Written Essays - 500 words

Outline of three ideas - Essay Example atrons for such expeditions; however, there are numerous fishing businesses that depend almost exclusively on the catches they obtain through more destructive mid- and deep-level trawling. These businesses could be encouraged, through law or regulation, to offset some of their harmful by-catch (the killing of valued or endangered animals such as dolphins, turtles or sharks) by returning a specific amount of plastic catch for every 5 live catches, for example. Drainage filters throughout our cities and towns are necessary to protect our water and food supplies. Filters would work to reduce the amount of trash that enters the oceans and pollutes the fishing industry. They could be installed in storm drains throughout the cities – making the city dwellers and the cities themselves obvious patrons of the system – and help prevent some of the plastics that are making their way into the ocean and poisoning the fish. Because of land effects of plastic on the fishing industry, this industry might also be interested in being patrons, helping with educating the public and helping with other marketing efforts. A filter could be developed that works in much the same way as the filters we use for our tap water. Water would flow into the storm drains and go through a series of chambers that have different levels of screening material before it is finally free to enter the river or ocean system. It would be necessary to also begin a new c ity service similar to the waste department to maintain these filter systems, emptying the chambers of collected trash on a regular basis. To reduce the amount of rubber produced and its harmful effects on the environment, these tires are designed to stay full for nearly the life of the vehicle. They are made from ultra-durable rubber created with recycled plastic and rubber materials and designed with a special self-heal technology that instantly closes off any potential punctures. These tires would be in high demand by tire

Business ethics Essay Example | Topics and Well Written Essays - 500 words - 3

Business ethics - Essay Example akes the market becomes inefficient because it makes companies look good not by producing the best product and services at the least cost but by means of misrepresentation. Companies are made to look profitable by financial acrobatics when in fact, they are not making that much. The prevalence of fraud has a grave social implication whch everybody experienced recently. The financial crisis was precipitated by fraudulent companies where investors lost its trust in the market because of frauds. The law intends to make the financial industry objective and ensures that the financial reports that companies release to the general public are accurate and free from fraud and prevent other companies to have undue advantage through fraud such as the case of Enron. This will make the market more efficient because it prevents fraud which distorts the market. The Sarbanes-Oxley Act law intends to remove the possiblity that auditing firms and companies will connive to give the public a false financial report that distorts the operation of a free market. The Sarbanes-Oxley Act would prevent auditing firms such as Arthur Andersen to assumed the role of an Management Consultant as well as Auditor for companies like Enron. When Arthur Anderson became a Consultant for Enron, it became in effect its employee and thus losing its independence thereby conflict of interest inevitably arise which is inimical to the efficient operation of the market. This would be prevented with the Sarbanes-Oxley Act because the law stresses Auditor Independence that establishes the independence of external auditor to limit the conflicts of interest. Conflict of interest leads to losing independence of audit report that lead to their audit certification of a company’s overstated earnings and thereby distorting the market by not reflecting the true financial position of its players. The Sarbanes-Oxley Act also mandates the establishment of a Public Company Accounting Oversight Board which

Analyze 4 Photojournalism Works Essay Example | Topics and Well Written Essays - 1000 words

Analyze 4 Photojournalism Works - Essay Example The picture’s most powerful concept is the wooden structure within which the person life is contained. A picture speaking a thousand words for a life of an individual. The photojournalism technique used in this is on creating the bigger portfolio depending on the different stages for the person. The other pictures follow the above shown person as happy, living in decency, and making only the optimal use of his life. Not creating major things he couldn’t protect, couldn’t make or waste his energy in making. The simple comprehensive base is set, the best friends are loyal (dogs) and continuity is on the go. The picture then depicts the adoption of simplicity in life rather than making it boggled down by creating tough events while a person can be easily happy with a limited amount of what he/she can have. The harsh reality of life is poverty. Millions and billions of people die every day due to lack of food. People such as shown above try everyday to find food, something that can provide taste to their buds to have them sleep at night. The nights for them then are very painful with only the survival to look forward to. The picture is very powerful showing a homeless man trying to find something to drink from KFS’s thrown garbage drink cups. The problems of a homeless is then very much concentrated toward just being able to survive with something in the stomach. This is because nobody trusts them, nobody hires them and nobody can help them. People don’t want to see them in pain but being scared to help them as they might remember and ask for more favors is what scared people to take the first step. The photographer is then trying to interpret that in such a harsh condition where even drinking is being such a problem, the homeless face pleads for help, nurture and care. The interpretation of the photo is through the eyes of the photographer, taking the point of the view from within the trash can. Emphasising on the phenomena of luck in