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# The total market value of real estate in

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The total market value of real estate in [#permalink]

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05 Sep 2012, 19:04
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The total market value of real estate in Altonville has steadily declined over the past four years. This decline has meant that the overall figure on which the city’s property tax is based—the assessed value of that real estate—has also declined. Moreover, the percentage of assessed value that was paid as property taxes to the city did not change during this period. The information above most strongly supports which of the following?

A. Money collected from property taxes provided most of Altonville’s revenue during the past four years.
B. The percentage of Altonville’s overall revenue that was collected from property taxes did not change over the past four years.
C. Altonville officials had proposed raising property tax rates during the past four years but never did so because of strong opposition from property owners.
D. The total amount of revenue that Altonville has collected from property taxes has declined over the past four years.
E. During the past four years, Altonville officials also did not increase tax rates on other sources of revenue such as retail sales or business profits.

Mike - Can you please explain the key to solving percentage problems
[Reveal] Spoiler: OA

Last edited by Harley1980 on 27 Jun 2015, 13:06, edited 1 time in total.

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Re: The total market value of real estate in [#permalink]

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05 Sep 2012, 20:19
I would go with D.

Given, in 4 years,

market value of real estate >> declined
assessed value of that real estate >> declined
percentage of assessed value that was paid as property taxes >> remained same

this means that the town is now getting same percentage of tax of a lesser amount. Declining revenue.

Ex. Property assessed value was say \$10K before. Tax rate was 5%. So tax = \$500

4 years later, the assessed value is say 8K. Tax rate is still the same, 5%. So tax = \$400

Reduced tax >> reduced tax revenue

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Re: The total market value of real estate in [#permalink]

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05 Sep 2012, 21:05
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venmic wrote:
Mike - Can you please explain the key to solving percentage problems

The total market value of real estate in Altonville has steadily declined over the past four
years. This decline has meant that the overall figure on which the city’s property tax is
based—the assessed value of that real estate—has also declined. Moreover, the percentage
of assessed value that was paid as property taxes to the city did not change during this
period. The information above most strongly supports which of the following?
A. Money collected from property taxes provided most of Altonville’s revenue during the past
four years.
B. The percentage of Altonville’s overall revenue that was collected from property taxes did
not change over the past four years.
C. Altonville officials had proposed raising property tax rates during the past four years but
never did so because of strong opposition from property owners.
D. The total amount of revenue that Altonville has collected from property taxes has declined
over the past four years.
E. During the past four years, Altonville officials also did not increase tax rates on other
sources of revenue such as retail sales or business profits.

I would go with D as well... clearly A, C and E are ruled out... so left with B and D... B says "The percentage of Altonville’s overall revenue that was collected from property taxes did not change over the past four years." but the question says 'percentage
of assessed value'
..... so D has to be the answer

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Re: The total market value of real estate in [#permalink]

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06 Sep 2012, 11:05
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venmic wrote:
The total market value of real estate in Altonville has steadily declined over the past four years. This decline has meant that the overall figure on which the city’s property tax is based—the assessed value of that real estate—has also declined. Moreover, the percentage of assessed value that was paid as property taxes to the city did not change during this period. The information above most strongly supports which of the following?
A. Money collected from property taxes provided most of Altonville’s revenue during the past four years.
B. The percentage of Altonville’s overall revenue that was collected from property taxes did not change over the past four years.
C. Altonville officials had proposed raising property tax rates during the past four years but never did so because of strong opposition from property owners.
D. The total amount of revenue that Altonville has collected from property taxes has declined over the past four years.
E. During the past four years, Altonville officials also did not increase tax rates on other sources of revenue such as retail sales or business profits.

Dear Venmic

I don't know that there's a "key" to solving percent problems. Of course ....

percent = (Part)/(Whole)* 100

... so in any CR question that discusses them, the direction of change of the percent (increase or decrease) does not necessarily have to be the same as the direction of change of the "Part", so long as the "Whole" also changes. It just a matter of keeping straight, for any particular assertion --- are they talking about the "percent", the "Part", or the "Whole"? --- because information given could be about any of those three.

Let's look at this particular argument.
The total market value of real estate in Altonville has steadily declined over the past four years.
That's the "whole" from which real estate tax is assessed.
percent = (Part)/(Whole)* 100
(percent of property tax) = (total \$ amount of property taxes)/(total market value of real estate)*100
This decline has meant that the overall figure on which the city’s property tax is based—the assessed value of that real estate—has also declined.
A bit redundant --- this sentence just points out that this same "whole" --- the "total market value of real estate" ---- is, of course, the basis of real estate tax. Property tax is based on property!
Moreover, the percentage of assessed value that was paid as property taxes to the city did not change during this period.
OK, now we know --- "percent" stayed the same. So, sentence #1 told us "Whole" declined", and here we also know that "percent" stays the same --- this ineluctably means: "Part" must have also decreased. That's the only way the "Whole" could decrease while the "percent" stays the same. That "Part" would be the actual monetary amount of the property tax --- that must decrease. This is exactly what the correct answer D says.

Does this make sense?

Mike
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Re: The total market value of real estate in [#permalink]

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06 Sep 2012, 12:25
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Ans shud be D.

What is OA?
TMV of RE is decreasing ---> decrease in Prop tax.
%age of Prop Tax did not change implies TMV must be decreasing.

What is OA?

Thanks
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Re: The total market value of real estate in [#permalink]

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06 Sep 2012, 18:05
+1 D

If the taxable amount has declined and the percentage to calculate the taxes has not changed, the revenue generated by this tax has declined.
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Re: The total market value of real estate in [#permalink]

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26 Feb 2013, 05:20
From my point of view the answer should be E but i am not sure. Hope you get the correct one.

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Re: The total market value of real estate in [#permalink]

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26 Feb 2013, 11:23
robertnunzia wrote:
From my point of view the answer should be E but i am not sure. Hope you get the correct one.

Dear Robert,
Do you understand why (D) is the OA? Let me know if you have any questions about my post above.

Mike
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Re: The total market value of real estate in [#permalink]

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26 Feb 2013, 21:03
robertnunzia wrote:
From my point of view the answer should be E but i am not sure. Hope you get the correct one.

Actually, (E) is out of scope. Just because the property tax rate was not increased, we cannot say that other tax rates were not increased either. We cannot colcude about any other rates from the given argument.

Revenue from property tax = Tax rate * Total market value of property.

If total market values goes down (given in the argument) but tax rate doesn't change (also given in the argument), revenue from property tax will go down.

If tax rate = 10%

Total market value = \$1000
Revenue from property tax = 10/100 * 1000 = 100

If total market value goes down to 800,
Revenue from property tax = 10/100 * 800 = 80

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Re: The total market value of real estate in [#permalink]

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15 Jun 2014, 03:12
mikemcgarry wrote:
venmic wrote:
The total market value of real estate in Altonville has steadily declined over the past four years. This decline has meant that the overall figure on which the city’s property tax is based—the assessed value of that real estate—has also declined. Moreover, the percentage of assessed value that was paid as property taxes to the city did not change during this period. The information above most strongly supports which of the following?
A. Money collected from property taxes provided most of Altonville’s revenue during the past four years.
B. The percentage of Altonville’s overall revenue that was collected from property taxes did not change over the past four years.
C. Altonville officials had proposed raising property tax rates during the past four years but never did so because of strong opposition from property owners.
D. The total amount of revenue that Altonville has collected from property taxes has declined over the past four years.
E. During the past four years, Altonville officials also did not increase tax rates on other sources of revenue such as retail sales or business profits.

Dear Venmic

I don't know that there's a "key" to solving percent problems. Of course ....

percent = (Part)/(Whole)* 100

... so in any CR question that discusses them, the direction of change of the percent (increase or decrease) does not necessarily have to be the same as the direction of change of the "Part", so long as the "Whole" also changes. It just a matter of keeping straight, for any particular assertion --- are they talking about the "percent", the "Part", or the "Whole"? --- because information given could be about any of those three.

Let's look at this particular argument.
The total market value of real estate in Altonville has steadily declined over the past four years.
That's the "whole" from which real estate tax is assessed.
percent = (Part)/(Whole)* 100
(percent of property tax) = (total \$ amount of property taxes)/(total market value of real estate)*100
This decline has meant that the overall figure on which the city’s property tax is based—the assessed value of that real estate—has also declined.
A bit redundant --- this sentence just points out that this same "whole" --- the "total market value of real estate" ---- is, of course, the basis of real estate tax. Property tax is based on property!
Moreover, the percentage of assessed value that was paid as property taxes to the city did not change during this period.
OK, now we know --- "percent" stayed the same. So, sentence #1 told us "Whole" declined", and here we also know that "percent" stays the same --- this ineluctably means: "Part" must have also decreased. That's the only way the "Whole" could decrease while the "percent" stays the same. That "Part" would be the actual monetary amount of the property tax --- that must decrease. This is exactly what the correct answer D says.

Does this make sense?

Mike
I was confused between C and D & picked C
C does support the last statement of the argument. Is there any stated reason why it is not considered for the answer choice? Thanks
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Re: The total market value of real estate in [#permalink]

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15 Jun 2014, 21:38
The reason (C) is not correct is this:

This is an inference question. You are looking for an option which you can conclude from the argument. The argument does not mention the Altonville officials at all. We do not know what they had proposed. The argument only talks about the market value, assessed value and actual tax percentage. It doesn't talk about the officials. Hence, there is no way we can conclude (C) from the given argument. Note that in inference questions, the correct option should give no new information. Option (C) is giving new information and is not the answer.
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Re: The total market value of real estate in [#permalink]

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16 Jun 2014, 11:46
joshnsit wrote:
I was confused between C and D & picked C
C does support the last statement of the argument. Is there any stated reason why it is not considered for the answer choice? Thanks

Dear joshnsit,
I see the brilliant Karishma already gave you a very good answer to this question. I will just add that you may find this blog article helpful:
http://magoosh.com/gmat/2013/gmat-criti ... inference/
Mike
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Re: The total market value of real estate in [#permalink]

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15 Aug 2014, 11:44
The total market value of real estate in Altonville has steadily declined over the past four years. This decline has meant that the overall figure on which the city’s property tax is based—the assessed value of that real estate—has also declined. The percentage of assessed value that was paid as property taxes to the city, however, did not change from year to year during this period.
The information above most strongly supports which of the following?
A. The percentage of Altonville’s yearly revenue that comes from money collected in property taxes did not change over the past four years.
B. The percentage of Altonville’s yearly revenue that comes from money collected in property taxes has declined steadily over the past four years.
C. The amount of revenue that Altonville collected from property taxes was lower last year than it was four years ago.
D. During the past four years, Altonville officials increased tax rates on other sources of revenue such as retail sales and business profits.
E. Altonville will soon require property owners to pay a higher percentage of the assessed value of their property as property tax.

Please explain why B is incorrect. I am confused between B and C and If you have time I will be happy if you explain all options I would like to get response from GMATGuruNY(The Princeton Review Teacher). I like his explanation

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Re: The total market value of real estate in [#permalink]

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