Antonella works for a company that pays a year-end bonus in December of each year.Assume that Antonella expects to receive a $20,000 bonus in December this year,her tax rate is 30%,and her after-tax rate of return is 8%.If Antonella's employer paid her bonus on January 1 of next year instead of in December,how much would this action save Antonella in today's tax dollars? If Antonella's tax rate increased to 32% next year,would receiving the bonus in January still be advantageous? Use Exhibit 3.1 in the text.

Question

Antonella works for a company that pays a year-end bonus in December of each year.Assume that Antonella expects to receive a $20,000 bonus in December this year,her tax rate is 30%,and her after-tax rate of return is 8%.If Antonella's employer paid her bonus on January 1 of next year instead of in December,how much would this action save Antonella in today's tax dollars? If Antonella's tax rate increased to 32% next year,would receiving the bonus in January still be advantageous?  Use Exhibit 3.1 in the text.

Quizplus · Accepted Answer

The Answer of Antonella works for a company that pays a year-end bonus in December of each year.Assume that Antonella expects to receive a $20,000 bonus in December this year,her tax rate is 30%,and her after-tax rate of return is 8%.If Antonella's employer paid her bonus on January 1 of next year instead of in December,how much would this action save Antonella in today's tax dollars? If Antonella's tax rate increased to 32% next year,would receiving the bonus in January still be advantageous?  Use Exhibit 3.1 in the text.

Antonella Works for a Company That Pays a Year-End Bonus