Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $20,000 bill from her accountant for consulting services related to her small business. Reese can pay the $20,000 bill anytime before January 30 of next year without penalty. Assume Reese's marginal tax rate is 32 percent this year and will be 37 percent next year, and that she can earn an after-tax rate of return of 12 percent on her investments. a. What is the after-tax cost if she pays the $20,000 bill in December? After-tax cost b. What is the after-tax cost if she pays the $20,000 bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) After-tax cost .708 .683 EXHIBIT 3-1 Present Value of a Single Payment at Various Annual Rates of Return 4% 5% 6% 7% 8% 9% 10% 11% 12% Year 1 962 952 943 935 926 917 909 901 .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 .659 .636 Year 5 .822 .784 .747 .713 .681 .650 .621 | .593 Year 6 | .790 .746 | .705 .666 .630 .596 .564 535 .507 Year 7 .760 .711 .665 .623 .583 .547 .513 482 Year 8 .731 .677 .627582 .540 502 .467434 404 Year 9 .703 .645 .592 .544 .500 .460 .424 .391 .361 Year 10 .676 .614 | .558 .508 .463 .422 386 .352 .322 Year 11 .650 .585 527 .475 .429 .388 .350 .317 .287 Year 12 .625 .557 .497 .444 .397 .356 .319 .286 .257 Year 13 .601 .530 .469 415 368 .326 .290 .258 229 Year 14 .577 .505 .442 .388 .340 .299 263 232 .205 Year 15 .555 .481 .417 362 315 .275 .239 .209 .183