In 2015, Jill, age 35, received a job offer with two alternative compensation packages to choose from. The first package offers her $125,000 annual salary with no qualified fringe benefits, requires her to pay $3,200 a year for parking, and will purchase life insurance at a cost of $2,100. The second package offers $115,000 annual salary, employer-provided health insurance, annual free parking (worth $310 per month), $212,000 of life insurance (purchasing on her own would have been $2,100 annually), and free flight benefits (she figures that it will save her $6,250 per year). If Jill chooses the first package, she would purchase health and life insurance benefits at $5,500 and $2,100, respectively, annually after taxes and spend another $6,250 in flights while traveling. Assume her marginal tax rate is 28 percent. (Use Exhibit 12-10.)

a-1. Which compensation package should she choose? Answer: Package 2

a-2.	How much would she benefit in after-tax dollars by choosing this compensation package instead of the other compensation package? (Round your answer to the nearest whole dollar amount.)

After-Tax Dollar:

b-1. Assume the first package offers $138,000 salary with no qualified benefits instead of $125,000 salary plus benefits. Which compensation package should she choose?

Answer: Package 2

b-2.	How much would she benefit in after-tax dollars by choosing this package? (Round your answer to the nearest whole dollar amount.) After-Tax Dollar:

EXHIBIT 12-10 Uniform Premiums for $1,000 of Group-Term Life Insurance Protection Cost per $1,000 of Protection for One Month 5-year Age Bracket $0.05 06 08 09 Under 25 25 to 29 30 to 34 35 to 39 40 to 44 45 to 49 50 to 54 55 to 59 60 to 64 65 to 69 70 and above .15 23 43 1.27 2.06