This decision will depend on whether or not Howie needs immediate money and the rate of inflation. Assuming there is no inflation, as the issue did not mention it, and Howie prefers the decision that yields the greatest financial reward, simply calculate and lower the tax in each situation, and then compare them.
<u>Scenario 1:</u> Total receipt upon ticket delivery with 46% deduction
46% = 46 \ 100 = 0.46
To find the value to be deducted, let's multiply the total by 0.46
500,000 * 0.46 = $ 230,000
That way Howie would get $ 500,000- $ 230000 = $ 270,000
<u>Scenario 2:</u> 25 installments of $ 36,000 with 25% deduction
The gross total will be 25x $ 36,000 = $ 900,000
Now it is enough to decrease 25% of the total amount, to find the amount of the tax.
25% = 25 \ 100 = 0.25
$ 900,000 * 0.25 = $ 225,000
Finally, simply decrease the amount received by the tax amount:
$ 900,000- $ 225,000 = $ 675,000
Therefore, Howie would be better off if he opted for the installment payment.
