Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December, he performed $20,000 of legal services for a client. Hank typically requires his clients to pay his bills immediately upon receipt. Assume his marginal tax rate is 30 percent this year and will be 33 percent next year, and that he can earn an after-tax rate of return of 12 percent on his investments. UseExhibit 3.1.

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

After- tax income ?

b.	What is the after-tax income if Hank sends his client the bill in January? (Do not round intermediate calculations. Round "PV Factor" to 3 decimal places. Round your answer to 2 decimal places.) after-tax income ?

c.

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

	December
	January

d.	What is the after-tax income if Hank expects his marginal tax rate to be 25 percent next year and sends his client the bill in January? (Round "PV Factor" to 3 decimal places. Round your answer to 2 decimal places.)

After-tax income ?