ulz instructlohs Question 1 10 pts Property taxes in DeKalb County are roughly 2

Question

ulz instructlohs Question 1 10 pts Property taxes in DeKalb County are roughly 2.66% of the purchase price every year. If you just bought a $100,000 home, what is the nearest penny? S[PVTAX Assume that the house remains worth $100,000 forever, property tax rates never change, and that a 9% discount rate is used for Biscounting. V of all the future property tax payments to the DQuestion 2 10 pts Consider a coupon bond that has a S 1,000 par value and a coupon rate of 10%. The bond is currently selling for $1,150 and has 8 years to maturity oo0 4 F7 F8 FVO 5

Explanation / Answer

1. Computation of Present Value of Property tax

Property Tax = Purchase price * 2.66% = $100000 * 2.66% = $2660

Present Value of Property tax = Property Tax Per Year / Discount Rate

Present Value of Property tax = $2660 / 9%

Present Value of Property tax = $29555.56

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