Connect Chapter 2 - Problems
Bill Mason is considering two job offers. Job 1 pays a salary of $36,500 with $4,500 of nontaxable employee benefits. Job 2 pays a salary of $34,700 and $6,120 of nontaxable benefits. Use a 28 percent tax rate. (a) Calculate the monetary value of each job. (b) Which position would have the higher monetary value?
Comparing Employment Offers [LO2-4] (a) Monetary Value: - Job 1: $42,750 - Job 2: $43,200 (b) Job 2
Luke Anderson is earning $48,000 a year in a city located in the Midwest. He is interviewing for a position in a city with a cost-of-living 12 percent higher than where he currently lives. What is the minimum salary Luke would need at his new job to maintain the same standard of living?
Comparing Living Costs [LO2-2] Minimum Salary: $53,760
Which of the following employee benefits has the greater value? (Assume a 28 percent tax rate.) (a) A nontaxable pension contribution of $4,300 or the use of a company car with a taxable value of $6,325. (b) A life insurance policy with a taxable value of $450 or a nontaxable increase in health insurance coverage valued at $340.
Comparing Taxes for Employee Benefits [LO2-4] (a) Company Car. (b) Health Insurance.
Marla Opper currently earns $50,000 a year and is offered a job in another city for $56,000. The city she would move to has 8 percent higher living expenses than her current city. (a) What minimum salary should Marla require before accepting the new position? (b) Should Marla accept the new job?
Comparing the Value of a Career Change [LO2-5] (a) Minimum Salary Required: $54,000 (b) Yes
Calculate the future value of a retirement account in which you deposit $2,000 a year for 30 years with an annual interest rate of 5 percent.
Computing Future Value [LO2-4] Future Value: $132,877.70
Jenny Lopez estimates that as a result of completing her master's degree, she will earn an additional $8,000 a year for the next 40 years. (a) What would be the total amount of these additional earnings? (b) What would be the future value of these additional earnings based on an annual interest rate of 6 percent?
Determining the Future Value of Education [LO2-1] (a) Additional Earnings: $320,000 (b) Future Value: $1,238,096.72
Joshua Kelly estimates that taking some classes would result in earning $3,800 more a year for the next 30 years. Based on an annual interest rate of 4 percent, calculate the future value of these classes.
Future Value of Advanced Training [LO2-5] Future Value: $213,122.76
During a job interview, Pam Thompson is offered a salary of $32,000. The company gives annual raises of 4 percent. What will be Pam's salary during her fifth year on the job?
Calculating Future Value of Salary [LO2-3] Pam's Salary in Fifth Year: $37,435.47
Helen Ming receives a travel allowance of $180 each week from her company for time away from home. If this allowance is taxable and she has a 24 percent income tax rate, what amount will she have to pay in taxes for this employee benefit?
Calculating the After-Tax Value of Employee Benefits [LO2-4] Annual Tax Amount: $2,246.40
