43. The purchase price for a new home was $350,000. 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 $368,000 and the assessed value was $360,000. What will the buyer pay for one year's property taxes if the tax rate is 4%
Answer: C
The buyer will pay $14,400 for one year's property taxes.
To determine the property taxes, the assessed value of the home should be used. With an assessed value of $360,000 and a tax rate of 4%, the annual property tax is calculated as $360,000 multiplied by 0.04, resulting in $14,400.
A) $14,000
This option is incorrect because it miscalculates the property taxes based on the assessed value. The correct calculation using the assessed value of $360,000 at a tax rate of 4% results in a higher amount than $14,000.
B) $11,200
Option B is also incorrect. It significantly underestimates the property taxes, likely due to a miscalculation of the assessed value or tax rate. The correct calculation yields a higher figure than $11,200.
C) $14,400
This option is correct as it accurately reflects the property taxes based on the assessed value of $360,000 at a tax rate of 4%. The calculation, $360,000 x 0.04, equals $14,400.
D) $14,720
This choice is incorrect. It overestimates the property taxes, potentially due to misapplying the tax rate or using an incorrect assessed value. The correct calculation provides a lower amount than $14,720.
Conclusion
The correct answer is $14,400 because it is derived from the appropriate assessed value and tax rate, based on the given information. All other options fail due to either underestimating or overestimating the property taxes, demonstrating a misunderstanding of the assessment and tax calculation process.