Felice is in the hotel management field.She rents an apartment near the hotel so she can walk to work.She pays $1,000 per month for rent.Felice has just been offered a similar position at a different hotel.The salary will be $14,000 lower,but they do require she live in the hotel to be on call and provide her with a suite to live in.Felice has a marginal tax rate of 32%.She will be financially ahead by accepting the new position.

Question

Quizplus · Accepted Answer

By living in the suite provided by the new hotel, Felice will save $12,000 in rent ($1,000/month x 12 months). Her salary decrease of $14,000 will be offset by this savings, resulting in a net increase of $2,000. With a marginal tax rate of 32%, this increase will be further reduced to $1,360, but Felice will still be financially ahead by accepting the new position.

Felice Is in the Hotel Management Field