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# If the value of a piece of property decreases by 10% while the new tax

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Intern
Joined: 02 Sep 2010
Posts: 2

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If the value of a piece of property decreases by 10% while the new tax [#permalink]

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10 Oct 2011, 13:50
00:00

Difficulty:

25% (medium)

Question Stats:

63% (00:32) correct 37% (00:24) wrong based on 19 sessions

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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%
E. taxes decrease by 10%
[Reveal] Spoiler: OA

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Senior Manager
Joined: 11 May 2011
Posts: 355

Kudos [?]: 120 [0], given: 46

Location: US
Re: If the value of a piece of property decreases by 10% while the new tax [#permalink]

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10 Oct 2011, 14:11
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%.

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Kudos [?]: 120 [0], given: 46

Director
Joined: 01 Feb 2011
Posts: 726

Kudos [?]: 143 [0], given: 42

Re: If the value of a piece of property decreases by 10% while the new tax [#permalink]

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10 Oct 2011, 18:16
------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

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Senior Manager
Status: MBAing!!!!
Joined: 24 Jun 2011
Posts: 287

Kudos [?]: 52 [0], given: 56

Location: United States (FL)
Concentration: Finance, Real Estate
GPA: 3.65
WE: Project Management (Real Estate)
Re: If the value of a piece of property decreases by 10% while the new tax [#permalink]

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10 Oct 2011, 19:57

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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Senior Manager
Joined: 13 May 2011
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WE 1: IT 1 Yr
WE 2: Supply Chain 5 Yrs
Re: If the value of a piece of property decreases by 10% while the new tax [#permalink]

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10 Oct 2011, 22:12
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%

Kudos [?]: 289 [0], given: 11

Re: If the value of a piece of property decreases by 10% while the new tax   [#permalink] 10 Oct 2011, 22:12
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# If the value of a piece of property decreases by 10% while the new tax

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