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Problem 13-66 (LO 13-3) (Algo) Skip to question   [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 40 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 nearest whole dollar amount.   Problem 13-66 Part b (Algo) b. Assume Julie, an XYZ employee, has the option of participating in XYZ's deferred compensation plan. Julie's marginal tax rate is 37 percent, and she expects the rate to remain constant over the next five years. Julie is trying to decide how much deferred compensation she will need to receive from XYZ in five years to make her indifferent between receiving the current salary of $19,600 and receiving the deferred compensation payment. If Julie takes the salary, she will invest it in a taxable corporate bond paying interest at 10 percent annually (after taxes). What amount of deferred compensation would accomplish this objective?

Problem 13-66 (LO 13-3) (Algo) Skip to question   [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 40 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 nearest whole dollar amount.   Problem 13-66 Part b (Algo) b. Assume Julie, an XYZ employee, has the option of participating in XYZ's deferred compensation plan. Julie's marginal tax rate is 37 percent, and she expects the rate to remain constant over the next five years. Julie is trying to decide how much deferred compensation she will need to receive from XYZ in five years to make her indifferent between receiving the current salary of $19,600 and receiving the deferred compensation payment. If Julie takes the salary, she will invest it in a taxable corporate bond paying interest at 10 percent annually (after taxes). What amount of deferred compensation would accomplish this objective?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 13-66 (LO 13-3) (Algo)

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[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 40 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 nearest whole dollar amount.

 

Problem 13-66 Part b (Algo)

b. Assume Julie, an XYZ employee, has the option of participating in XYZ's deferred compensation plan. Julie's marginal tax rate is 37 percent, and she expects the rate to remain constant over the next five years. Julie is trying to decide how much deferred compensation she will need to receive from XYZ in five years to make her indifferent between receiving the current salary of $19,600 and receiving the deferred compensation payment. If Julie takes the salary, she will invest it in a taxable corporate bond paying interest at 10 percent annually (after taxes). What amount of deferred compensation would accomplish this objective?

Future Value of $1 n 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 1.0% 1.01000 1.02010 2.0% 1.02000 1.04040 1.06121 1.08243 1.10408 1.03030 1.04060 1.05101 1.06152 1.07214 1.12616 1.14869 1.17166 1.08286 1.09369 1.10462 1.11567 1.12683 1.13809 1.19509 1.21899 1.24337 1.26824 1.29361 1.14947 1.31948 1.16097 1.17258 1.18430 1.19615 1.20811 1.22019 1.28243 1.34587 1.37279 1.40024 1.42825 1.45681 1.48595 1.64061 3.0% 1.03000 1.06090 1.09273 1.12551 1.15927 1.19405 1.22987 3.75% 1.03750 1.07641 1.11677 1.15865 1.20210 1.24718 1.29395 1.26677 1.34247 4.0% 1.04000 1.08160 1.12486 1.16986 1.21665 1.26532 1.31593 1.36857 1.42331 1.48024 1.53945 1.60103 1.66507 1.30477 1.34392 1.38423 1.42576 1.46853 1.39281 1.44504 1.49923 1.55545 1.61378 1.51259 1.67430 1.73168 1.55797 1.60471 1.65285 1.70243 1.75351 1.80611 2.09378 1.73709 1.80223 1.86981 1.93993 2.01268 2.08815 1.80094 1.87298 1.94790 2.02582 2.10685 2.19112 2.66584 2.51017 4.25% 1.04250 1.08681 1.13300 5.0% 1.05000 1.10250 1.15763 6.0% 1.06000 1.12360 1.19102 1.18115 1.21551 1.26248 1.23135 1.27628 1.28368 1.34010 1.33824 1.40710 1.39511 1.47746 1.45440 1.55133 1.51621 1.62889 1.58065 1.71034 1.64783 1.79586 1.71786 1.88565 1.79087 1.97993 1.86699 2.07893 1.94633 2.18287 2.02905 2.29202 2.11529 2.40662 2.20519 2.52695 2.29891 2.65330 2.83075 3.38635 7.0% 1.07000 1.14490 1.22504 1.31080 1.40255 1.50073 1.60578 1.71819 1.83846 1.96715 2.10485 2.25219 2.40985 2.57853 2.75903 2.95216 2.69277 3.15882 2.85434 3.37993 3.02560 3.61653 3.20714 3.86968 4.29187 5.42743 1.33823 1.41852 1.50363 1.59385 1.68948 1.79085 1.89830 2.01220 2.13293 2.26090 2.39656 2.54035 8.0% 1.08000 1.16640 1.25971 1.36049 1.46933 1.58687 1.71382 1.85093 1.99900 2.15892 2.33164 2.51817 2.71962 2.93719 3.17217 3.42594 3.70002 3.99602 4.31570 4.66096 6.84848 9.0% 1.09000 1.18810 1.29503 1.41158 1.53862 1.67710 1.82804 1.99256 2.17189 2.36736 2.58043 2.81266 3.06580 3.34173 3.64248 3.97031 4.32763 4.71712 5.14166 5.60441 8.62308 10.0% 12.0% 13.0% 14.0% 15.0% 20.0% 25.0% 1.10000 1.12000 1.13000 1.14000 1.15000 1.20000 1.25000 1.21000 1.25440 1.27690 1.29960 1.32250 1.44000 1.56250 1.33100 1.40493 1.44290 1.48154 1.52088 1.72800 1.95313 1.46410 1.57352 1.63047 1.68896 1.74901 2.07360 2.44141 1.61051 1.76234 1.84244 1.92541 2.01136 2.48832 3.05176 1.77156 1.97382 2.08195 2.19497 2.31306 2.98598 3.81470 1.94872 2.21068 2.35261 2.50227 2.66002 3.58318 4.76837 2.14359 2.47596 2.65844 2.85259 3.05902 4.29982 5.96046 2.35795 2.77308 3.00404 3.25195 3.51788 5.15978 7.45058 2.59374 3.10585 3.39457 3.70722 4.04556 6.19174 9.31323 2.85312 3.47855 3.83586 4.22623 4.65239 7.43008 11.64153 3.13843 3.89598 4.33452 4.81790 5.35025 8.91610 14.55192 3.45227 4.36349 4.89801 5.49241 6.15279 10.69932 18.18989 3.79750 4.88711 5.53475 6.26135 7.07571 12.83918 22.73737 4.17725 5.47357 6.25427 7.13794 8.13706 15.40702 28.42171 4.59497 6.13039 7.06733 8.13725 9.35762 18.48843 35.52714 5.05447 6.86604 7.98608 9.27646 10.76126 22.18611 44.40892 5.55992 7.68997 9.02427 10.57517 12.37545 26.62333 55.51115 6.11591 8.61276 10.19742 12.05569 14.23177 31.94800 69.38894 6.72750 9.64629 11.52309 13.74349 16.36654 38.33760 86.73617 10.83471 13.58546 17.00006 21.23054 26.46192 32.91895 95.39622 264.69780 11.0% 1.11000 1.23210 1.36763 1.51807 1.68506 1.87041 2.07616 2.30454 2.55804 2.83942 3.15176 3.49845 3.88328 4.31044 4.78459 5.31089 5.89509 6.54355 7.26334 8.06231
Transcribed Image Text:Future Value of $1 n 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 1.0% 1.01000 1.02010 2.0% 1.02000 1.04040 1.06121 1.08243 1.10408 1.03030 1.04060 1.05101 1.06152 1.07214 1.12616 1.14869 1.17166 1.08286 1.09369 1.10462 1.11567 1.12683 1.13809 1.19509 1.21899 1.24337 1.26824 1.29361 1.14947 1.31948 1.16097 1.17258 1.18430 1.19615 1.20811 1.22019 1.28243 1.34587 1.37279 1.40024 1.42825 1.45681 1.48595 1.64061 3.0% 1.03000 1.06090 1.09273 1.12551 1.15927 1.19405 1.22987 3.75% 1.03750 1.07641 1.11677 1.15865 1.20210 1.24718 1.29395 1.26677 1.34247 4.0% 1.04000 1.08160 1.12486 1.16986 1.21665 1.26532 1.31593 1.36857 1.42331 1.48024 1.53945 1.60103 1.66507 1.30477 1.34392 1.38423 1.42576 1.46853 1.39281 1.44504 1.49923 1.55545 1.61378 1.51259 1.67430 1.73168 1.55797 1.60471 1.65285 1.70243 1.75351 1.80611 2.09378 1.73709 1.80223 1.86981 1.93993 2.01268 2.08815 1.80094 1.87298 1.94790 2.02582 2.10685 2.19112 2.66584 2.51017 4.25% 1.04250 1.08681 1.13300 5.0% 1.05000 1.10250 1.15763 6.0% 1.06000 1.12360 1.19102 1.18115 1.21551 1.26248 1.23135 1.27628 1.28368 1.34010 1.33824 1.40710 1.39511 1.47746 1.45440 1.55133 1.51621 1.62889 1.58065 1.71034 1.64783 1.79586 1.71786 1.88565 1.79087 1.97993 1.86699 2.07893 1.94633 2.18287 2.02905 2.29202 2.11529 2.40662 2.20519 2.52695 2.29891 2.65330 2.83075 3.38635 7.0% 1.07000 1.14490 1.22504 1.31080 1.40255 1.50073 1.60578 1.71819 1.83846 1.96715 2.10485 2.25219 2.40985 2.57853 2.75903 2.95216 2.69277 3.15882 2.85434 3.37993 3.02560 3.61653 3.20714 3.86968 4.29187 5.42743 1.33823 1.41852 1.50363 1.59385 1.68948 1.79085 1.89830 2.01220 2.13293 2.26090 2.39656 2.54035 8.0% 1.08000 1.16640 1.25971 1.36049 1.46933 1.58687 1.71382 1.85093 1.99900 2.15892 2.33164 2.51817 2.71962 2.93719 3.17217 3.42594 3.70002 3.99602 4.31570 4.66096 6.84848 9.0% 1.09000 1.18810 1.29503 1.41158 1.53862 1.67710 1.82804 1.99256 2.17189 2.36736 2.58043 2.81266 3.06580 3.34173 3.64248 3.97031 4.32763 4.71712 5.14166 5.60441 8.62308 10.0% 12.0% 13.0% 14.0% 15.0% 20.0% 25.0% 1.10000 1.12000 1.13000 1.14000 1.15000 1.20000 1.25000 1.21000 1.25440 1.27690 1.29960 1.32250 1.44000 1.56250 1.33100 1.40493 1.44290 1.48154 1.52088 1.72800 1.95313 1.46410 1.57352 1.63047 1.68896 1.74901 2.07360 2.44141 1.61051 1.76234 1.84244 1.92541 2.01136 2.48832 3.05176 1.77156 1.97382 2.08195 2.19497 2.31306 2.98598 3.81470 1.94872 2.21068 2.35261 2.50227 2.66002 3.58318 4.76837 2.14359 2.47596 2.65844 2.85259 3.05902 4.29982 5.96046 2.35795 2.77308 3.00404 3.25195 3.51788 5.15978 7.45058 2.59374 3.10585 3.39457 3.70722 4.04556 6.19174 9.31323 2.85312 3.47855 3.83586 4.22623 4.65239 7.43008 11.64153 3.13843 3.89598 4.33452 4.81790 5.35025 8.91610 14.55192 3.45227 4.36349 4.89801 5.49241 6.15279 10.69932 18.18989 3.79750 4.88711 5.53475 6.26135 7.07571 12.83918 22.73737 4.17725 5.47357 6.25427 7.13794 8.13706 15.40702 28.42171 4.59497 6.13039 7.06733 8.13725 9.35762 18.48843 35.52714 5.05447 6.86604 7.98608 9.27646 10.76126 22.18611 44.40892 5.55992 7.68997 9.02427 10.57517 12.37545 26.62333 55.51115 6.11591 8.61276 10.19742 12.05569 14.23177 31.94800 69.38894 6.72750 9.64629 11.52309 13.74349 16.36654 38.33760 86.73617 10.83471 13.58546 17.00006 21.23054 26.46192 32.91895 95.39622 264.69780 11.0% 1.11000 1.23210 1.36763 1.51807 1.68506 1.87041 2.07616 2.30454 2.55804 2.83942 3.15176 3.49845 3.88328 4.31044 4.78459 5.31089 5.89509 6.54355 7.26334 8.06231
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