Which compensation package should she choose

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Question - Sylvana is given a job offer with two alternative compensation packages to choose from. The first package offers her $250,000 annual salary with no qualified fringe benefits. The second package offers $235,000 annual salary plus health and life insurance benefits. If Sylvana were required to purchase the health and life insurance benefits herself, she would need to pay $10,000 annually after taxes. Assume her marginal tax rate is 35 percent.

Required -

1. a1. Which compensation package should she choose?

2. a2. How much would she benefit in after-tax dollars by choosing this package?

3. b1. Assume the second package offers $230,000 plus benefits instead of $235,000 plus benefits. Which compensation package should she choose?

4. b2. How much would she benefit in after-tax dollars by choosing this package?

Reference no: EM132510555

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