Seikos current salary is $127,500. Her marginal tax rate is 32 percent and she fancies...
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Seikos current salary is $127,500. Her marginal tax rate is 32 percent and she fancies European sports cars. She purchases a new auto each year. Seiko is currently a manager for an Idaho Office Supply. Her friend, knowing of her interest in sports cars, tells her about a manager position at the local BMW and Porsche dealer. The new position pays only $110,800 per year, but it allows employees to purchase one new car per year at a discount of $24,300. This discount qualifies as a nontaxable fringe benefit. In an effort to keep Seiko as an employee, Idaho Office Supply offers her a $17,100 raise. Answer the following questions about this analysis.
What before-tax salary would Seiko need to receive from Idaho Office Supply to make her financially indifferent (after taxes) between receiving additional salary from Idaho Office Supply and accepting a position at the auto dealership?
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