Bluebird, Inc., does not provide its employees with any tax-exempt fringe benefits. The company is considering adopting a hospital and medical benefits insurance plan that will cost approximately $7,500 per employee. In order to adopt this plan, the company may have to reduce salaries and/or lower future salary increases. Bluebird is in the 35% (combined Federal and state rates) bracket. Bluebird is also responsible for matching the Social Security and Medicare taxes withheld on employees salaries. The benefits insurance plan will not be subject to the Social Security and Medicare taxes, and the company is not eligible for the small business credit for health insurance. The employees generally fall into three marginal tax rate groups: The company has asked you to assist in its financial planning for the benefits insurance plan by computing the following: Income tax SSN & Medicare Tax Total .15 .0765 .2265 .25 .0765 .3265 .35 .0145 .3645 c. What is the companys after-tax cost of the exempt compensation