Bob, an employee of UNC, is contemplating the amount to contribute to the flexible medical spending account for the next calendar year. Based on past medical expenses, and projections of medical spending for next year, Bob has estimated that his annual medical expenses are likely to be normally distributed with a mean of $6000 and standard deviation of $2000. Bob's marginal tax rates are as follows: Federal 28%, State 5.8% and Social Security 6.2%. Assume that Bob has enough cash in his other savings accounts, and hence has no cash-flow constraints. How much should Bob contribute to the flexible medical spending account? What are Bob's expected annual savings by using the flexible account?