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Susan's employer is awarded her a bonus and is offering two different payout options. The first option is to receive a $10,000 bonus at the
Susan's employer is awarded her a bonus and is offering two different payout options. The first option is to receive a $10,000 bonus at the end of Year 1. The second option is to receive a $5,000 bonus at the end of Year 1, and a $5,000 bonus at the end of Year 2. Regardless of when she receives the funds, Susan plans to go on a shopping spree with the money. A. If the taxpayer faces a marginal tax rate of 31 percent in both Year 1 and Year 2, what is the after-tax amount Susan will receive if she elects the first option? $ B. If the taxpayer faces a marginal tax rate of 31 percent in both Year 1 and Year 2, what is the after-tax amount Susan will receive if she elects the second option? $ C. If the taxpayer faces a marginal tax rate of 31 percent Year 1, but expects her marginal tax rate in Year 2 to increase to 35 percent, what is the after-tax amount Susan will receive if she elects the second option? $ D. If the taxpayer faces a marginal tax rate of 31 percent Year 1, but expects her marginal tax rate in Year 2 to decrease to 27 percent, what is the after-tax amount Susan will receive if she elects the second option? $ E. Susan's friend Mark recommends that she chose the first option, and then invest the $10,000 in a fund that earns an annual pretax return on 10%. If Susan faces a marginal tax rate of 31 percent in both Year 1 and Year 2, what is the after-tax amount Susan will receive if she elects the first option and invests the money for one year? $
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