XYZ Corporation has a deferred compensation plan under which it allows certain employees to defer up to 15 percent of their salary for five years. For purposes of this problem, ignore payroll taxes in your computations. (Use Table 1.) Note: Round your intermediate calculations and final answers to the nearest whole dollar amount. Problem 13-66 Part a (Algo) a. Assume XYZ has a marginal tax rate of 21 percent for the foreseeable future and earns an after-tax rate of return of 17 percent on its assets. Joel Johnson, XYZ's VP of finance, is attempting to determine what amount of deferred compensation XYZ should be willing to pay in five years that would make XYZ indifferent between paying the current salary of $10,500 and paying the deferred compensation. What amount of deferred compensation would accomplish this objective?
XYZ Corporation has a deferred compensation plan under which it allows certain employees to defer up to 15 percent of their salary for five years. For purposes of this problem, ignore payroll taxes in your computations. (Use Table 1.)
Note: Round your intermediate calculations and final answers to the nearest whole dollar amount.
Problem 13-66 Part a (Algo)
a. Assume XYZ has a marginal tax rate of 21 percent for the foreseeable future and earns an after-tax
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