At the beginning of the year, Mr. L put $50,000 cash into Investment X. At the end of the year, he received a check for $2,800, representing his annual return on the investment. Mr. L's marginal tax rate on ordinary income is 39.6 percent. However, his return on Investment X is a capital gain taxed at 20 percent. At the beginning of the year, Mr. L could have invested his $50,000 in Business Z with an 8 percent annual return. However, this return would have been ordinary income rather than capital gain. A. Considering the fact that Mr. L could have invested in Business Z, how much implicit tax did he pay with respect to Investment X? B. Did Mr. L make the correct decision by putting his $50,000 into Investment X instead of Business Z? Mrs. O is negotiating to purchase a tract of land from DC Company, a calendar year taxpayer. DC bought this land six years ago for $480,000. According to a recent appraisal, the land is worth $800,000 in the current real estate market. According to DC's director of tax, the company's profit on the sale will be taxed at 30 percent if the sale occurs this year. However, this tax rate will definitely increase to 40 percent if the sale occurs next year. Mrs. O is aware of DC's need for haste and offers to pay $785,000 for the land with a guarantee that the sale will close by December 31. a) Calculate the amount of after-tax cash for the each of the following alternatives. b) Should DC accept Mrs. O's offer