In the current year, Jill, age 35, received a job offer with two alternative compensation packages to choose from. The first package offers her $90,000 annual salary with no qualified fringe benefits and requires her to pay $3,500 a year for parking and to purchase life insurance at a cost of $1,000. The second package offers $80,000 annual salary, employer-provided health insurance, annual free parking (worth $320 per month), $200,000 of life insurance (purchasing on her own would have been $1,000 annually), and free flight benefits (she estimates that it will save her $5,000 per year). If Jill chooses the first package, she will purchase the health and life insurance benefits herself at a cost of $1,000 annually after taxes and spend another $5,000 in flights while traveling. Assume her marginal tax rate is 32 percent. (Use Exhibit 12-08.)

1. Required:a1. Which compensation package should she choose?
2. a2. How much would she benefit in after-tax dollars by choosing this compensation package instead of the alternative package?
3. b1. Assume the first package offers $100,000 salary with no qualified benefits instead of $90,000 salary and the other benefits and costs are the same. Which compensation package should she choose?
4. b2. How much would she benefit in after-tax dollars by choosing this package?

EXHIBIT 12-8 Uniform Premiums for $1,000 of Group-Term Life Insurance Protection

Table Summary: Chart shows cost per $1,000 of life insurance protection for one month per 5-year age bracket.

5-Year Age Bracket Cost per $1,000 of Protection for One Month Under 25 $0.05

25 to 29 .06 30 to 34 .08 35 to 39 .09 40 to 44 .10 45 to 49 .15 50 to 54 .23 55 to 59 .43 60 to 64 .66 65 to 69 1.27 70 and above2.06