Question

"Tyler earns $80,000 per year and has a 22 percent marginal tax rate. His employer is willing to provide health insurance coverage for Tyler if he will agree to a salary reduction. The insurance will cost the employer $4,680. How much salary should Tyler be willing to forgo to receive the $4,680 in health insurance coverage"

Answer 1

$6000

Step-by-step explanation:

"Tyler earns $80,000 per year and has a 22 percent marginal tax rate. His employer is willing to provide health insurance coverage for Tyler if he will agree to a salary reduction.

The insurance will cost the employer $4,680.

The amount of salary that Tyler should be willing to forgo to receive the $4,680 in health insurance coverage will be 4,680 / (1 - The marginal tax rate) = 4680 / 0.78 = $6000