11 Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $21,000 bill from her accountant for consulting services related to her small business. Reese can pay the $21000 bill anytime before January 30 of next year without penalty. Assume Reese's marginal tax rate is 32 percent this year and will be 37 percent next year, and that she can earn an after-tax rate of return of 5 percent on her investments. a. What is the after-tax cost if she pays the $21,000 bill in December? Book After-tax com b. What is the after-tax cost if she pays the $21,000 bill in January? Use Exhibit 3 (Round your answer to the nearest whole dollar amount.) After-tax cost EXHIBIT 3-1 Present Value of a Single Payment at Various Annual Rates of Return 4% 5% 6% 7% 8% 9% 10% 11% 12% Year 1 .962 .952 .943 .935 .926 .917 .909 .901 .893 Year 2 .925 .907 .890 .873 .857 .842 .826 .812 .797 Year 3 .889 .864 .840 .816 .794 .772 .751 731 .712 Year 4 .855 .823 .792 .763 .735 .708 .683 .659 .636 Year 5 .822 .784 .747 .713 .681 .650 .621 .593 .567 Year 6 .790 .746 .705 .666 .630 .596 .564 .535 .507 Year 7 .760 .711 .665 .623 .583 .547 .513 .482 .452 Year 8 .731 .677 .627 .582 .540 .502 467 .434 .404 Year 9 .703 .645 .592 .544 .500 .460 .424 .391 .361 Year 10 .676 .614 .558 .508 .463 .422 .386 352 .322 Year 11 .650 .585 .527 .475 .429 .388 .350 .317 .287 Year 12 .625 .557 .497 .444 .397 .356 .319 .286 .257 Year 13 .601 .530 .469 .415 .368 326 .290 .258 Year 14 .229 .577 .505 .442 .388 .340 .299 .263 .232 Year 15 .205 .555 .481 .417 .362 .315 275 .239 .209 .183 c. Based on requirements a and b, should Reese pay the $21,000 bill in December or January? December January