a. Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $20,000 bill from her accountant for consulting services related to her small business. Isabel has plenty of cash in the bank to cover the bill and can pay the $20,000 bill any time before January 5 of next year without penalty. Assume her marginal tax rate is 30 percent this year and next year, and that she can earn an after-tax rate of return of 12 percent on her investments. When should she pay the $20,000 billthis year or next?

b. What if Isabel has a current MTR of 20 percent but expects a MTR of 40 percent next year?