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 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

Felice will save $1,000 per month on rent, which is $12,000 per year. Her salary will be $14,000 lower, but her after-tax income will be higher because she will not have to pay rent.

Felice Is in the Hotel Management Field