Gustavo, a cash basis taxpayer, owes $51,875 in tax deductible consulting fees for his business. Assume that it is December 28 and that Gustavo can avoid any finance charges if he pays the accounting fees by January 10th. Gustavos tax rate this year is 38% and his after-tax rate of return is 10%. At what tax rate next year, will Gustavo be indifferent between paying the $51,875 this year and next year? Use the PV Table below for any calculations. Enter your answer to the nearest two decimal places (i.e., enter 34.2% as 0.34 and 37.8% as 0.38). Present Value of a Single Payment at Various Annual Rates of Return Year 8% 9% 10% 11% 12% 1 .926 .917 .909 .901 .893 2 .857 .842 .826 .812 .797 3 .794 .8772 .751 .731 .712

Answer is 0.42, please explain step by step how to get to this answer.