Question

Required information The following information applies to the questions displayed below! Seiko's current salary is $130,000. Her marginal tax rate is 32 percent and she fancies European sports cars. She purchases a new auto each year. Seiko is currently a manager for Idaho Office Supply. Her friend, knowing of her interest in sports cars, tells her about a manager position at the local BMW and Porsche dealer. The new position pays only $113,100 per year, but it allows employees to purchase one new car per year at a discount of $23.000. This discount qualifies as a nontaxable fringe benefit. In an effort to keep Seiko as an employee, Idaho Office Supply offers her a $12.700 raise. Answer the following questions about this analysis. c. What before tax salary would Seiko need to receive from Idaho Office Supply to make her financially indifferent after taxes) between receiving additional salary from Idaho Office Supply and accepting a position at the auto dealership? (Round your Intermediate computations to the nearest dollar amount.) Salary needed

Answer 1

C what before tax salary would seiko need to receive from Idaho office supplies to make her Financially indifferent.

Answer: $146923.5 rounded off $146924

Reason: After tax salary from car dealerships is 113100*68%+23000=$99908

Therefore to be indifferent after tax salary required from idaho office supplies =$99908

Tax rate is 32%

Therefore before tax salary required =$99908/68%

=$146923.5