Leslie participates in IBO’s nonqualified deferred compensation plan. For 2019, she is deferring 10 percent of her $300,000 annual salary. Based on her deemed investment choice, Leslie expects to earn a 7 percent before-tax rate of return on her deferred compensation, which she plans to receive in 10 years. Leslie’s marginal tax rate in 2019 is 32 percent. IBO’s marginal tax rate is 21 percent (ignore payroll taxes in your analysis).

a. Assuming Leslie’s marginal tax rate in 10 years (when she receives the distribution) is 33 percent, what is Leslie’s after-tax accumulation on the deferred compensation?

b. Assuming Leslie’s marginal tax rate in 10 years (when she receives the distribution) is 20 percent, what is Leslie’s after-tax accumulation on the deferred compensation?

c. Assuming IBO’s cost of capital is 8 percent after taxes, how much deferred compensation should IBO be willing to pay Leslie that would make it indifferent between paying 10 percent of Leslie’s current salary or deferring it for 10 years?