Hank, a calendar$-$year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December, he performed

$$32,000$ of legal services for a client. Hank typically requires his clients to pay his bills immediately upon receipt. Assume his marginal

tax rate is $32$ percent this year and will be $35$ percent next year, and that he can earn an after$-$tax rate of return of $12$ percent on his

investments. Use Exhibit $3\mathrm{.}1.$

Required:

a$.$ What is the after$-$tax income if Hank sends his client the bill in December?

b$.$ What is the after$-$tax income if Hank sends his client the bill in January?

Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.

c$.$ Should Hank send his client the bill in December or January?

d$.$ What is the after$-$tax income if Hank expects his marginal tax rate to be $24$ percent next year and sends his client the bill in January?

Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.

e$.$ Should Hank send his client the bill in December or January if he expects his marginal tax rate to be $32$ percent this year and $24$

percent next year?

Complete this question by entering your answers in the tabs below.

Required $A$

Required B

Required D

What is the after$-$tax income if Hank expects his marginal tax rate to be $24$ percent next year and sends his client the bill in

January?

Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.

EXHIBIT $3-1$ Present Value of a Single Payment at Various Annual Rates of Return

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