1. 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, requires her to pay $3,500 a year for parking, and pay her life insurance premiums at a cost of $1,000. The second package offers $80,000 annual salary, employer provided health insurance, annual free parking (worth $315 per month), $200,000 of life insurance (purchasing on her own would have been $1,000 annually), and free flight benefits (she figures that it will save her $5,000 per year). If Jill chooses the first package, she would purchase the health and life insurance benefits herself at a cost of $5,000 annually after taxes and spend another $5,000 in flights while traveling. Assume her marginal tax rate is 32 percent.

1. Which compensation package should she choose and by how much would she benefit in after-tax dollars by choosing this compensation package instead of the other compensation package?
2. Assume the first package offers $100,000 salary with no qualified benefits instead of $90,000 salary plus benefits. Which compensation package should she choose and by how much would she benefit in after-tax dollars by choosing this package?