Wendell is employed at a salary of $150 000 per annum,paid in cash,the company income tax rate is 30%,and the average personal income tax rate is 42%.There are no other taxes.The after-tax cost of employing Wendell for the year and the after-tax benefit received by Andy are,respectively:

Question

Quizplus · Accepted Answer

The company income tax on Wendell's salary is calculated as 30% of his salary, which is $150,000 x 0.3 = $45,000. This reduces the cost of employing Wendell to the company to $150,000 - $45,000 = $105,000.

The personal income tax on Wendell's salary is calculated as 42% of his salary, which is $150,000 x 0.42 = $63,000. This is the after-tax benefit received by Andy.

Therefore, the after-tax cost of employing Wendell for the year is $105,000, and the after-tax benefit received by Andy is $63,000. The best choice is B.

Wendell Is Employed at a Salary of $150 000 Per