Answer:
a. $44,200
b. $44,684
Explanation:
To calculate after-tax costs we just need to deduct the tax saving amount from the pre-tax amount. The tax saving amount can be calculated bt multiplying the pre-tax amount into the tax rate
Requirement A (If she pays the $65,000 in December)
After-tax cost = Pre tax cost - PV of tax saving
After-tax cost = 65,000 - 20,800
After-tax cost = $44,200
working
Tax saving = $65,000 x 32%
Tax saving = $20,800
Requirement B (If she pays the $65,000 in January)
After tax cost = $65,000 - $20,315
After tax cost = $44,684
working
Tax saving = $65,000 x 35%
Tax saving = $22,750
Pv of tax saving = $22,750 x 0.893
Pv of tax saving = $20,316
