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Nitai, who is single and has no dependents, was planning on spending the weekend repairing his car. On Friday, Nitais employer called and offered him $350 in overtime pay if he would agree to work over the weekend. Nitai could get his car repaired over the weekend at Autofix for $273. If Nitai works over the weekend, he will have to pay the $273 to have his car repaired but he will earn $350. Assume Nitai pays tax at a flat 12 percent rate. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Problem 4-32 Part-b b-1. Strictly considering tax factors, should Nitai work or repair his car if the $273 he must pay to have his car fixed is deductible for AGI? O Work Repair b-2. Given the answer in b-1 above, by how much is Nitai better or worse off?

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Answer #1

b-1 Repair cost 3 for AG I Tax iablty he duced by explanaわor) Benibit 30 8 > 350x 88%-0308 0. 24Tax benibit Net Ben iF 67.76 CLO SS Net benihit As found in bi, by working rather than repairing his car Nitai better off by 67.76b-1)work

b-2)better off

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