End-of-Chapter Exercise 23 Question Help * Property taxes ia particular district

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End-of-Chapter Exercise 23 Question Help * Property taxes ia particular district are 2% of the purchase price every year if you just purchased a $250 000 home, what is the present value of all the future property tax payments? Assume that the house remains worth $250,000 forever, property tax rates never change, and that a 4% interest rate is used for discounting The present value of all the future property tax plyments is S(Round your response to two decimal places) Enter your answer in the answer box and then click Check Answer tly to Check Clear All All parts showing 0 Type here to search

Explanation / Answer

Property tax to be paid = $250,000*0.02=$5000

The present value = Property tax to be paid / interest rate = $5000/0.04=$125,000

So the answer is :- $125,000

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