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Required information [The following information applies to the questions displayed below.] XYZ Corporation has a deferred compensation plan under which it allows certain employees to

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Required information [The following information applies to the questions displayed below.] XYZ Corporation has a deferred compensation plan under which it allows certain employees to defer up to 15 percent of their salary for five years. For purposes of this problem, ignore payroll taxes in your computations. (Use Table 1) (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Assume XYZ has a marginal tax rate of 21 percent for the foresecable future and earns an after-tax rate of return of 17 percent on its assets. Joel Johnson, XYZ's VP of finance, is attempting to determine what amount of deferred compensation XYZ should be willing to bay in five years that would make XYZ indifferent between paying the current salary of $10,500 and paying the deferred compensation. What amount of deferred compensation would accomplish this objective? Required information [The following information applies to the questions displayed below.] XYZ Corporation has a deferred compensation plan under which it allows certain employees to defer up to 15 percent of their salary for five years. For purposes of this problem, ignore paytoll taxes in your computations. (Use Table1.) (Round your intermediate calculations and final answers to the nearest whole dollar amount.) b. Assume Julle, an XYZ employee, has the option of participating in XYZ's deferred compensation plan. Julie's morginal tax rate is 37 percent, and she expects the rote to remain constant over the next five years. Julle is trying to decide how much deferred compensation she will need to recelve from XYZ in five years to make her indifferent between recelving the current salary of $10,500 and receiving the deferred compensation payment. If Julie takes the salary, she will invest it in a taxable corporate bond paying interest at 6 percent annually (after taxes). What amount of deferred compensation would accomplish this objective? Future Vatue of 51

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