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Anton [14]
3 years ago
9

Property taxes in a particular district are 4% of the purchase price of a home every year. If you just purchased a $250,000 home

, what is the present value of all the future property tax payments.
Business
1 answer:
avanturin [10]3 years ago
5 0

Answer:

Assume the interest rate used for discounting is 5%.

Then, the present value of all the future property tax payments is $200,000.

Explanation:

We have the annual property tax payment is calculated as: Purchased price * tax rate = 250,000 * 4% = $10,000.

The tax payment will form a perpetuity of $10,000 each ( that is: C = 10,000). We apply the formula for calculating present value of perpetuity with assumption that discount rate is 5% to come up with the answer as below:

PV = C/i = 10,000/5% = $200,000.

So, the answer is $200,000.

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Top level managers are those in charged of setting the long term goal of a company, they are basically the board of directors of a company.

The middle managers are the engine of a company, they push the line managers to work and supervices their work.

The first level managers are also known as floor managers, they oil the engine of the company.

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