Compare the present discounted value of taxes an individual who is the sole owner of a corporation that has $1 million in profits would pay under the following two scenarios:

(a) The individual pays out the profits to himself or herself, invests them in a bond yielding 10 percent, which he or she holds for seven years;

(b) The individual retains the profits inside the corporation, and invests in an asset yielding 10 percent. After seven years, the individual sells the asset, which has retained its original value, and distributes the proceeds to himself or herself. (For simplicity, look at two cases: one in which the individual is in the 40 percent marginal tax bracket and pays a 20 percent capital gains tax rate, and the other in which the individual is in the 15 percent marginal tax bracket and pays a 10 percent capital gains tax rate.)