History Bookmarks People Window Help Ch 3 Classroom Problem Solutions ) ChQuBi B

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History Bookmarks People Window Help Ch 3 Classroom Problem Solutions ) ChQuBi Bala × unt.instructure.com/courses/2913/quizzes/15342/take SuplementWareho.. D 94 Admissio. C0072AC.. Other Bookm D Question 3 10 pts Property taxes in DeKalb Cou y are roughly 2.66% of the purchase price every year. If you just bought a $100,000 home, what is the PV of all the future property tax payments to the nearest penny? S[PVTAX] Assume that the house remains worth S100,000 forever, property tax rates never change, and that a 9% discount rate is used for discounting. Question 4 10 pts 20 F3 F7 FS

Explanation / Answer

Solution:-

Purchase price of the home = $100,000

Property tax = $100,000*2.66% =$2660

Discount rate= 9%

Since the payment is to be made indefinitely present value of the property tax

                                                                  = Annual property tax / Discount rate

                                                                  =$2,660/9%

                                                                  =$29,555.56

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