Based Only on the Information Provided for Each Scenario, Determine

question 130

Essay

Based only on the information provided for each scenario, determine whether Kristi or Cindy will benefit more from using the timing strategy and why there will be a benefit to that person. Use Exhibit 3.1. (Round discount factor(s)to three decimal places.)a. Kristi has a 40 percent tax rate and can defer $24,000 of income. Cindy has a 30 percent tax rate and can defer $34,000 of income. b. Kristy has a 30 percent tax rate and a 11 percent after-tax rate of return and can defer $29,000 of income for three years. Cindy has a 40 percent tax rate and an 9 percent after-tax rate of return and can defer $24,000 of income for four years.

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Definitions:

Workers

Workers refer to individuals engaged in any form of employment or labor, contributing their skills and efforts in exchange for compensation.

Variable Costs

Costs that vary directly with the level of production or sales, such as materials and labor.

Total Cost

The sum of all costs incurred by a business in producing a good or service, including both fixed and variable costs.

Output

The total quantity of goods or services produced by a company or an economy.