f********* My apologies. The problem says 105, but it should say 10%.

Taxation Question - Suppose Tommy, the proprietor of Garrison Pub, can time when he deducts a $100,000 expense for tax purposes. Current interest rates are 105 on fully taxable securities, and Tommy faces a current tax rate of 32%. If Tommy accelerates the deduction to year 1, the savings can be invested at current interest rates. Tommy must decide whether to accelerate the deduction to year 1 or instead deduct it in year 2. Part A-When should Tommy deduct the expense? Part B - What should Tommy do if he expects his tax rate in year 2 is to increase to 37%