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Question 5 (5 points) Jim and Peter both have jobs where their employers spend $80,000 on their annual compensation. Jim's employer pays it all in
Question 5 (5 points) Jim and Peter both have jobs where their employers spend $80,000 on their annual compensation. Jim's employer pays it all in wages, Peter's pays $70,000 in wages and spends $10,000 on health insurance for Peter. Jim uses $10,000 of his wages to buy health insurance which we will assume is equivalent to Peter's. Both pay a tax rate of 30 percent on wage income. Which statement is true? 0 1] Jim and Peter's compensation packages are equally valuable O 2] Which compensation package is more valuable depends on how much they care about health insurance 0 3) Peter's compensation package is more valuable because both have equivalent health insurance and Peter has more after-tax income left to spend on other things 0 4] Jim's compensation package is more valuable because both have equivalent health insurance and Jim has more after-tax income left to spend on other things
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