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can some one give me an explan for this ?

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Intern
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can some one give me an explan for this ? [#permalink] New post 10 Oct 2011, 12:50
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A
B
C
D
E

Difficulty:

  5% (low)

Question Stats:

67% (01:40) correct 33% (00:18) wrong based on 12 sessions
If the value of a piece of property decreases by 10% while the new tax rate on the property represent 110% of the original tax rate, what is the effect on the taxes?
a - taxes increase by 10%
b- taxes increase by 1%
c- there is no change in taxes
d- taxes decrease by 1%
c- taxes decrease by 10%
[Reveal] Spoiler: OA
Senior Manager
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Re: can some one give me an explan for this ? [#permalink] New post 10 Oct 2011, 13:11
Good question -

Cansider the value of property = 100, Original tax rate 10%, hence tax value = 100*10% = 10.
Decreased value of property = 90, New tax rate = 110% of 10 = 11%, hence tax value = 90*11% = 9.9
10-9.9 = decrease by 1%.

Answer D.

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Director
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Re: can some one give me an explan for this ? [#permalink] New post 10 Oct 2011, 17:16
------old----new
value--100---90
taxrate- x%---(110/100)x%

tax (x/100)*100-----(110/100)(x/100)*90

x--------------99x/100

=> decrease

% decrease = ((old-new)/old)*100 = 1%

=> 1% decrease

Answer is D.
Senior Manager
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Re: can some one give me an explan for this ? [#permalink] New post 10 Oct 2011, 18:57
D is the answer.

Property Value - V
Tax Rate - T
0.9V*1.1T=0.99VT
(decrease/original)*100% = (0.99VT/VT)*100% = 99% Therefore taxes decrease by 1%.
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Re: can some one give me an explan for this ? [#permalink] New post 10 Oct 2011, 21:12
Original Value= 100
New Value = 90

Original Tax Rate = 100
New Tax Rate =110

Original Total Tax= (100*100/100)=100
New Total Tax =(90*110/100)=99
Change = 100-99= 1= decrease by 1%
Re: can some one give me an explan for this ?   [#permalink] 10 Oct 2011, 21:12
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