88. The purchase price for a new home was $250,000. The buyer put down 20% and the balance was a mortgage for 80% of the purchase price. The appraised value at the time of closing was $268,000 and the assessed value was $263,000. What will the buyer pay for one year's property taxes if the tax rate is 2%?
Answer: D
The buyer will pay $5,360 for one year's property taxes.
To calculate the property taxes, we use the assessed value of the home, which is $263,000. With a tax rate of 2%, the annual property tax is calculated as 2% of $263,000, resulting in a total of $5,360.
A) 5,000
This option is incorrect because it represents a calculation that does not reflect the assessed value and tax rate provided in the question. Specifically, 5,000 is approximately 1.9% of $263,000, which is below the stated tax rate.
B) 4,000
This option is also incorrect. A property tax of $4,000 would imply a tax rate of approximately 1.52% of the assessed value, which is significantly lower than the given 2% tax rate. Thus, it does not align with the information provided.
C) 6,260
This option is incorrect as well. A property tax of $6,260 would suggest a tax rate of approximately 2.38% of the assessed value, which exceeds the stated tax rate of 2%. Therefore, it is not a valid calculation based on the given data.
D) 5,360
This is the correct option. The annual property taxes are calculated by taking the assessed value of $263,000 and multiplying it by the tax rate of 2%. This results in $263,000 x 0.02 = $5,360, which accurately reflects the tax amount owed.
Conclusion
The correct answer, $5,360, is derived from multiplying the assessed value of the property by the tax rate, accurately reflecting the information provided. The other options fail to align with the correct calculations based on the assessed value and tax rate, making them invalid. Thus, $5,360 is definitively the amount the buyer will pay in property taxes for the year.