Isabel, a calendar year taxpayer, uses the cash method of accounting for her sole proprietorship. in late december she received a $33,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $33,000 bil anytime before Jan30 of next year without penalty. assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after tax rate of return of 7 percent on her investments. what is the after-tax cost if Isabel pays the $33,000 bil inDecember? what is the after-tax cost if Isabel pays the $33,000 bill in Jan?

EXHIBIT 3-1 Present Value of a Single Payment at Various Annual Rates of Return 4% 5% 6% 7% 8% 9% 10% 11% 12% Year 1 1962 .952 943 .935 926 .917 909 901 .893 Year 2 .925 .907 .890 .873 .857 842 .826 .812 .797 Year 3 .889 .864 .840 .816 .794 .772 .751 .731 .712 Year 4 .855 .823 .792 .763 .735 .708 .683 659 636 Year 5 .822 .784 .747 .713 .681 .650 621 .593 567 Year 6 .790 .746 .705 .666 .630 .596 .564 .535 507 Year 7 1.760 .711 .665 .623 .583 547 513 482 452 Year 8 .677 -731 .627 582 540 502 467 404 434 Year 9 645 -592 -703 544 500 460 391 .424 361 558 .614 422 508 Year 10 386 463 676 322 352 317 585 650 429 .527 Year 11 350 388 475 286 356 319 257 397 557 Year 12 .625 444 290 258 368 326 229 Year 13 530 415 601 469 232 263 340 205 299 388 505 Year 14 577 442 275 315 209 239 183 362 Year 15 3555 481 -287 497