Business, 05.03.2021 22:30, landofliam30
In the current year, Jill, age 35, received a job offer with two alternative compensation packages to choose from. The first package offers her $91,400 annual salary with no qualified fringe benefits and requires her to pay $4,200 a year for parking and to purchase life insurance at a cost of $1,700. The second package offers $81,400 annual salary, employer-provided health insurance, annual free parking (worth $385 per month), $200,000 of life insurance (purchasing on her own would have been $1,700 annually), and free flight benefits (she estimates that it will save her $5,700 per year). If Jill chooses the first package, she will purchase the health and life insurance benefits herself at a cost of $5,700 and $ 1,700 respectively, annually after taxes and spend another $5,700 in flights while traveling. Assume her marginal tax rate is 32 percent.
Required:
a. Which compensation package should she choose?
b. How much would she benefit in after-tax dollars by choosing this compensation package instead of the alternative package?
c. Assume the first package offers $100,000 salary with no qualified benefits instead of $91,400 salary and the other benefits and costs are the same. Which compensation package should she choose?
d. How much would she benefit in after-tax dollars by choosing this package?
Answers: 1
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In the current year, Jill, age 35, received a job offer with two alternative compensation packages t...
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