Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $65,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $65,000 bill anytime before January 30 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 8 percent on her investments. Required: a. What is the after-tax cost if Isabel pays the $65,000 bill in December? b. What is the after-tax cost if Isabel pays the $65,000 bill in January? Use Exhibit 3.1 Note: Round your answer to the nearest whole dollar amount. c. Based on requirements a and b, should Isabel pay the $65,000 bill in December or January? Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the after-tax cost if Isabel pays the $65,000 bill in December? After-tax cost Required A Required B > January 30 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 8 percent on her investments. Required: a. What is the after-tax cost if Isabel pays the $65,000 bill in December? b. What is the after-tax cost if Isabel pays the $65,000 bill in January? Use Exhibit 3.1. Note: Round your answer to the nearest whole dollar amount. c. Based on requirements a and b, should Isabel pay the $65,000 bill in December or January? Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the after-tax cost if Isabel pays the $65,000 bill in January? Use Exhibit 3.1. Note: Round your answer to the nearest whole dollar amount. After-tax cost < Required A Required C > Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $65,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $65,000 bill anytime before January 30 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 8 percent on her investments. Required: a. What is the after-tax cost if Isabel pays the $65,000 bill in December? b. What is the after-tax cost if Isabel pays the $65,000 bill in January? Use Exhibit 3.3 Note: Round your answer to the nearest whole dollar amount. c. Based on requirements a and b, should Isabel pay the $65,000 bill in December or January? Complete this question by entering your answers in the tabs below. Required A Required B Required C Based on requirements a and b, should Isabel pay the $20,000 bill in December or January? EXHIBIT 3-1 Present Value of a Single Payment at Various Annual Rates of Return Year 7 Year 8 4% 5% 6% Year 1 0.962 0.952 0.943 Year 2 0.925 0.907 0.890 Year 3 0.889 0.864 0.840 Year 4 0.855 0.823 0.792 Year 5 0.822 0.784 0.747 Year 6 0.790 0.746 0.705 0.760 0.711 0.665 0.627 0.731 0.677 0.540 0.502 7% 8% 9% 10% 11% 12% 0.935 0.926 0.917 0.909 0.901 0.893 0.873 0.857 0.842 0.826 0.812 0.797 0.816 0.794 0.772 0.751 0.731 0.712 0.763 0.735 0.708 0.683 0.659 0.636 0.713 0.681 0.650 0.621 0.593 0.567 0.666 0.630 0.596 0.564 0.623 0.583 0.547 0.513 0.582 0.467 0.535 0.507 0.482 0.452 0.434 0.404 Year 9 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 Year 10 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 Year 11 0.650 Year 12 0.625 0.557 0.497 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.444 0.397 0.356 0.319 0.286 0.257 Year 13 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 Year 14 0.577 Year 15 0.555 0.481 0.417 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.362 0.315 0.275 0.239 0.209 0.183 Return 4% 5% 6% 7% EXHIBIT 3-1 Present Value of a Single Payment at Various Annual Rates of 8% 9% 10% 11% 12% Year 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 Year 2 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 Year 3 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 Year 4 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 Year 5 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 Year 6 0.790 0.746 0.705 0.666 Year 7 0.760 0.711 0.665 0.630 0.596 0.564 0.535 0.507 0.623 0.583 0.547 0.513 0.482 0.452 Year 8 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 Year 9 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 Year 10 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 Year 11 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 Year 12 0.625 0.557 0.497 0.444 Year 13 0.601 0.530 0.469 0.415 0.368 0.326 Year 14 0.577 0.505 0.442 0.388 0.340 0.299 Year 15 0.555 0.481 0.417 0.362 0.315 0.275 0.397 0.356 0.319 0.286 0.257 0.290 0.258 0.229 0.263 0.239 0.232 0.205 0.209 0.183