manny, a calendar

Marny, a calendar year taxpayer, uses the cash method of accounting for his sole proprietorship in late December he performed $31,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny's marginal tax rate is 40 percent this year and next year and that he can eam an affer-tax rate of return of 5 percent on his investments a. What is the after-tax income if Manny sends his client the bill in December? Artax income b. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1 Atlettax income c. Based on requrement and should Manny send his chent the bel in December of January? O December January EXHIBIT 3-1 Present Value of a Single Payment at Various Annual Rates of Return Year 4% 5% 6% 7% 8% 9% 10% 11% 12% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1962 .925 .889 .855 .822 .790 760 .731 .703 .678 .650 .625 .601 .577 ..555 952 .907 .864 .823 .784 746 .711 .677 .645 .614 .585 .557 .530 .505 .481 .943 .890 1840 1792 1747 .705 .665 .627 .592 .558 .527 .497 .469 442 417 .935 .873 1816 .763 1713 .666 .623 .582 .544 .508 .475 444 .415 .388 362 926 .857 .794 .735 .681 .630 1588 .540 .500 463 .429 .397 .368 340 .315 .917 .842 .772 .708 .650 596 .547 .502 460 .422 .388 .356 326 .299 275 .909 .826 .751 .683 .621 .564 .513 .467 424 .386 350 319 .290 .263 .239 .901 .812 731 659 .593 .535 482 434 391 352 317 .286 .258 .232 .209 .896 .797 1712 .636 .567 .507 452 404 .361 322 287 257 .229 205 183