Manny, a calendaryear taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $ of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny's marginal tax rate is percent this year and next year, and that he can earn an aftertax rate of return of percent on his investments.
Required:
a What is the aftertax income if Manny sends his client the bill in December?
b What is the aftertax income if Manny sends his client the bill in January? Use Exhibit
Note: Round your answer to the nearest whole dollar amount.
c Based on requirements a and b should Manny send his client the bill in December or January?
Complete this question by entering your answers in the tabs below.
Required A
What is the aftertax income if Manny sends his client the bill in December?
Aftertax income
EXHIIBIT Present Value of a Single Payment at Various Annual Rates of
Return
table
