The IRS wants to speed up its tax return processing and is considering offering a $15 bonus to be added to the
refund subtracted from the payment owed to taxpayers whose payments are postmarked by March 15. The average taxpayer owes the IRS $1400.
The IRS figures this proposal would save $10 for each return that is received early on March 15 due to higher
processing efficiency lower overtime costs compared to returns postmarked on April 15. If one-half (50%) of taxpayers file on March 15 (and therefore receive
the $15 bonus mentioned above) and the remainder (50%) file on April 15 would the IRS be better off? Use a discount rate of 11% in calculating the net
present value of this proposal. (NOTE: Use the case of a single taxpayer (i.e. so FV = $1400) base your calculations on the March 15 versus April 15
dates and once again use the simple interest approximation assuming a 30-day period). In present value terms (or March 15 funds) how much better off will the
IRS be based on March 15?