MJH227
Aug 31, 2013, 04:23 PM
I need help with this problem, I do not even know where to begin, please help!
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $33,250 bill from her accountant for consulting services related to her small business. Isabel can pay the $33,250 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 14 percent this year and next year, and that she can earn an after-tax rate of return of 8 percent on her investments.
What is the after-tax cost if Isabel pays the $33,250 bill in December?
What is the after-tax cost if Isabel pays the $33,250 bill in January?
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $33,250 bill from her accountant for consulting services related to her small business. Isabel can pay the $33,250 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 14 percent this year and next year, and that she can earn an after-tax rate of return of 8 percent on her investments.
What is the after-tax cost if Isabel pays the $33,250 bill in December?
What is the after-tax cost if Isabel pays the $33,250 bill in January?