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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