Manny, a calendar year taxpayer uses the cash method of accounting for his sole proprietorship. in late december he performed $27,000 of legal services for client. Manny typically requires his clients to py his bills immediately upon receipt. assume Manny's marginal tax rate is 37% this year and next year, and that he can earn an after tax rate of refund of 10% on his investments. what is the after-tax income if Manny sends his client the bil in december? what is the after tax income if Manny sends his clients the bill in Jan? based on requirements, should Manny send his client the bill in december or january?

Leula.m neducation.com/Media/Connect_Production/bne/accounting/spilker EXHIBIT 3-1 Present Value of a Single Payment at Various Annual Rates of Return 4% 5% 6% 7% 8% 9% 10% Year 1 11% 962 12% 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 7 760 665 .623 .583 547 513 482 452 Year 8 -731 677 627 .582 .540 .502 467 434 404 Year 9 703 645 592 544 500 460 424 391 361 Year 10 .558 .614 .676 .508 .463 322 352 422 386 287 350 527 585 .650 Year 11 388 429 475 317 319 286 356 257 397 625 Year 12 557 .497 444 326 290 368 258 229 Year 13 530 .601 -469 232 205 263 299 388 577 -442 505 Year 14 340 209 239 315 362 481 Year 15 555 415 183 417 275 Leula.m neducation.com/Media/Connect_Production/bne/accounting/spilker EXHIBIT 3-1 Present Value of a Single Payment at Various Annual Rates of Return 4% 5% 6% 7% 8% 9% 10% Year 1 11% 962 12% 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 7 760 665 .623 .583 547 513 482 452 Year 8 -731 677 627 .582 .540 .502 467 434 404 Year 9 703 645 592 544 500 460 424 391 361 Year 10 .558 .614 .676 .508 .463 322 352 422 386 287 350 527 585 .650 Year 11 388 429 475 317 319 286 356 257 397 625 Year 12 557 .497 444 326 290 368 258 229 Year 13 530 .601 -469 232 205 263 299 388 577 -442 505 Year 14 340 209 239 315 362 481 Year 15 555 415 183 417 275