What is ABC’s after-tax cost of paying Marcus’s salary? 1 answer below »

Marcus is the CEO of publicly traded ABC Corporation and earns a salary of $1,500,000. Assume ABC has a 35 percent marginal tax rate.

a. What is ABC’s after-tax cost of paying Marcus’s salary?

b. Now assume that Marcus, in addition to the $1.5 million salary, earns a performance-based bonus of $500,000. What is ABC’s after-tax cost of paying Marcus’s salary?

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