In the current year, Jill, age 35, received a job offer with two alternative compensation packages to choose from. The first package offers her a $92,200 annual salary with no qualified fringe benefits and, requires her to pay $4,600 a year for parking and to purchase life insurance at a cost of $2,100. The second package offers an $81,100 annual salary, employer-provided health insurance, annual free parking (worth $440 per month), $200,000 of life insurance (purchasing on her own would have been $2,100 annually), and free flight benefits (she estimates that it will save her $6,100 per year). If Jill chooses the first package, she will purchase the health and life insurance benefits herself at a cost of $2,100 annually after taxes and spend another $6,100 in flights while traveling. Assume her marginal tax rate is 32 percent. (Use Exhibit 12-8.)

Required:

a1. Which compensation package should she choose?

a2. How much would she benefit in after-tax dollars by choosing this compensation package instead of the alternative package?

b1. Assume the first package offers a $112,000 salary instead of a $92,200 salary, and the other benefits and costs are the same. Which compensation package should she choose?

b2. How much would she benefit in after-tax dollars by choosing this package?