5. A house has a market value of $150,000. The assessed value is 50% of true cash value. What are the annual real estate taxes if the tax levy is 51½ mills?
Answer: B
The annual real estate taxes are $3,844.
To calculate the annual real estate taxes, first determine the assessed value of the house, which is 50% of the market value of $150,000. This results in an assessed value of $75,000. With a tax levy of 51½ mills (or 0.0515), the annual taxes are calculated as $75,000 multiplied by 0.0515, resulting in $3,844.
A) $1,538
This option is incorrect because it represents a calculation that does not accurately reflect the assessed value or the tax levy. The tax amount derived from the given values would not yield this figure, indicating an error in either the assessment or the tax rate application.
B) $3,844
This option is correct as it accurately reflects the calculation of the annual real estate taxes based on the assessed value of $75,000 and the tax levy of 51½ mills. The calculation confirms that the taxes owed are indeed $3,844.
C) $5,854
This option is incorrect. It suggests a higher tax amount that does not align with the assessed value of $75,000 when applying the tax rate of 51½ mills. The derived tax amount from the given values is less than this figure, indicating a miscalculation.
D) $7,688
This option is incorrect as it vastly overstates the annual real estate taxes. Given the assessed value of $75,000 and the tax levy, the calculated taxes cannot reach this amount, indicating a misunderstanding of how to apply the mill rate to the assessed value.
Conclusion
The correct answer of $3,844 results from the accurate application of the assessed value and the tax levy. Other options fail due to miscalculations or misunderstandings of how to derive the tax amount from the given figures. Thus, B is the only viable answer based on the provided data.