Answer:
Option 1 minimizes the after tax cost of obtaining the worker. After tax cost of hiring an employee = $62,410
Explanation:
Option 1: After tax cost of hiring an employee
After-tax cost of employee = $79,000 × (1 - 0.21) = $62,410
Option 2: After tax cost of engaging an independent contractor:
After tax cost of independent contractor = $86,000 × (1 - 0.21) = $67,940
Option 1 offers less cost, thus it is recommended to hire an employee.
