French Corporation wishes to hire Leslie as a consultant to design a comprehensive staff training program. The project is expected to take one year, and the parties have agreed to a tentative price of $60,000. Leslie has requested payment of one-half of the fee now, with the remainder paid in one year when the project is complete. Use Appendix A and Appendix B. (Cash outflows amounts should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate calculations and final answers to the nearest whole dollar amount.)

a. If Leslie expects her marginal tax rate to be 35 percent in both years, calculate the after-tax net present value of this contract to Leslie, using a 6 percent discount rate.

b. French Corporation expects its marginal tax rate to be 25 percent this year and 35 percent next year. Calculate the net present value of French's after-tax cost to enter into this contract using a 6 percent discount rate.

c-1. Given that French expects its tax rate to increase next year, it would prefer to pay more of the cost of the contract when the project is complete. Consider an alternative proposal under which French pays Leslie $10,000 this year, and $53,000 in one year when the contract is complete. Calculate the after-tax benefit of this counter proposal to Leslie and the after-tax cost to French.

Year 0: Cash received Tax cost Net cash flow Year 1 Cash received Tax cost Net cash flow Discount factor (6%) Present value of year 1 cash flow NPV