On April 1, 20X0, a corporation with a December 31 taxation year purchased a three-year investment certificate for $20,000.The certificate pays interest only at the end of the three-year term but interest is compounded annually at the rate of 10%. Currently, the corporation’s marginal tax rate is 28%. However, in 20X1, the marginal tax rate will decrease to 25%.

An individual makes the identical investment on April 1, 20X0.The individual’s marginal tax rate in 20X0 is also 28% and is expected to decrease to 25% in 20X1.

Required:

Calculate and compare the tax on the interest income for the three-year period for the individual and the corporation.