Table 1

Problem 13-66 (LO 13-3) (Algo) [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 30 percent of their salary for five years. For purposes of this problem, ignore payroll taxes in your computations. (Use Table 1) Note: Round your intermediate calculations and final answers to the neorest whole dollar omount. roblem 13-66 Part a (Algo) Assume XYZ has a marginal tax rate of 21 percent for the foreseeable future and eams an after-tax rate of return of 10 percent on its ssets. Joel Johnson, XYZ's VP of finance, Is attempting to determine what amount of deferred compensation XYZ should be willing to py in five years that would make XYZ indifferent between paying the current salary of $17,400 and paying the deferred ompensation. What amount of deferred compensation would accomplish this objective? b. Assume Julie, an XYZ employee, has the option of participating in XYZ 's deferred compensation plan. Julle's marginal tax rate is 37 percent, and she expects the rate 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 receiving the current salary of $17,400 and receiving the deferred compensation payment. If Julle 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