Vincent Lecavlier, a Montreal native, played for the Tampa Bay Lightning. He had a ten year contract worth $100 million ($10 million per year). He dreamed of playing for the Montreal Canadians and 4 years into his contract with Tampa Bay, he was traded to Montreal. He vetoed the trade as the tax rate in Quebec is considerably higher than in Florida so he would be worse off financially as he would pay more tax (his contract would move with him to Montreal and he would still be paid in USD). Assuming the Canadian dollar and US dollar trade at par, and given a tax rate of 40% in the US and 50% in Canada, if Montreal could offer a bonus to entice Vincent to move, what would that amount have to be? Assume his salary is paid monthly and invested into an account earning 5% interest compounded monthly. Further, assume taxes are automatically deducted from each paycheck.
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