Question: Present value: Congress and the president have decided to increase the Federal tax rate in an effort to reduce the budget deficit. Suppose that Caroline

Present value: Congress and the president have decided to increase the Federal tax rate in an effort to reduce the budget deficit. Suppose that Caroline Weslin will pay 35 percent of her bonus to the Federal government for taxes if she accepts the bonus today and 40 percent if she receives her bonus in two years. Will the increase in tax rates affect her decision?

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