Question
Matteo, who is single and has no dependents, was planning on spending the weekend repairing his car. On Friday, Matteos employer called and offered him
Matteo, who is single and has no dependents, was planning on spending the weekend repairing his car. On Friday, Matteos employer called and offered him $600 in overtime pay if he would agree to work over the weekend. Matteo could get his car repaired over the weekend at Autofix for $504. If Matteo works over the weekend, he will have to pay the $504 to have his car repaired, but he will earn $600. Assume Matteo pays tax at a flat 15 percent rate. (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
a-1. | Considering monetary considerations only, should Matteo work or repair the car if the $504 he must pay to have his car fixed is not deductible? |
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a-2. | Given the answer in a-1 above, by how much is Matteo better or worse off? |
b-1. | Considering monetary considerations only, should Matteo work or repair the car if the $504 he must pay to have his car fixed is deductible for AGI? |
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b-2. | Given the answer in b-1 above, by how much is Matteo better or worse off? |
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