Question: David Cheung is an operations manager for a large manufacturer. He earned $68,500 in 2012 and plans to contribute the maximum allowed to the firms

David Cheung is an operations manager for a large manufacturer. He earned $68,500 in 2012 and plans to contribute the maximum allowed to the firm’s 401(k) plan. Assuming that David is in the 25 percent tax bracket, calculate his taxable income and the amount of his tax savings. How much did it actually cost David on an after-tax basis to make this retirement plan contribution?

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