Mike received two job offers. Friendly Corporation would like to hire him as an employee at a salary of $50,000 and would pay the premiums for comprehensive medical insurance. Micro Corporation would like to hire him as an independent contractor. Mike would earn $55,000 annually in consulting fees working for Micro but would have to pay for his own medical insurance coverage at an annual cost of $5,000. Assume Mike is in the 25 percent tax bracket.

Calculate the after-tax cash flow generated by each job.

a. $33,675 from Friendly and $30,700 from Micro

b. $35,000 from Friendly and $36,250 from Micro

c. $37,500 from Friendly and $31,950 from Micro

d. $42,350 from Friendly and $33,479 from Micro