2. Harvey Redmond is planning a new business that he expects will grow into a large company within a few years. Harvey's lawyer has advised him that large companies are usually C-type corporations because of stock market considerations, so he's considering that form now to avoid reorganizing later on. However, he's also concerned about the after-tax income he'll be able to take out of the business during the first few years. Harvey thinks his business will have pretax earnings (after paying his salary) of about $150,000 per year for the first three years. Does it make sense for him to operate as a proprietorship for three years and then reorganize into a C-type at an estimated cost of $80,000-or to choose the C-type now at essentially no additional cost? Assume a simplified tax system in which the corporate rate is 34% and Harvey's personal tax rate is 28% on all income including dividends. Ignore both the fact that the cash flows occur at different times and the possibility of using an S-type corporation or an LLC.