If the value of a piece of property decreases by 10 percent while the

Question

If the value of a piece of property decreases by 10 percent while the tax rate on the property increases by 10 percent, what is the effect on the taxes?

A. Taxes increase by 10 percent
B. Taxes increase by 1 percent
C. There is no change in taxes
D. Taxes decrease by 1 percent
E. Taxes decrease by 10 percent

lacktutor · Answer

Let’s say that the value of property is x and tax rate y%. Then tax will be x*y%. 
And if the value of property decreases by 10% which should be 0,9x and tax rate increases by 10% which should be 1,1%, then tax will be 0,9*1,1*x*y=0,99x*y.

xy-0,99xy= 0,01xy 
1 percent decrease.

The answer choice is D
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CareerGeek · Answer

Let the initial value = 1000$ & Tax = 10% = 10/100*1000 = 100$
value of a piece of property decreases by 10 percent = 1000 - 100 = 900$
Tax increases by 10% = 10 + 1 = 11%
New Tax = 11% of 900 = 11/100*900 = 99$

--> Taxes decreased by 1 percent

IMO Option D

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Kinshook · Answer

Let property price be  p_1  and tax rate be t_1 
 p_1t_1 =Taxes
New Property Price  p_2 = .9P_1 
and new tax rate =  t_2 = 1.1 t_1

New Taxes =  .9P_1 * 1.1 t_1 = .99 p_1t_1  =99% of old taxes
Taxes decrease by 1%

IMO D

ScottTargetTestPrep · Answer

We can let the original property value be $1000 and the original tax rate be 10%. We see that the original amount of taxes on the property is 1000 x 0.1 = $100.

Now the new property value is $900, and the new tax rate is 11%. The new amount of taxes on the property is 900 x 0.11 = $99.

We see that the amount of taxes is decreased by $1, or 1% of the original amount of taxes.

Answer: D

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If the value of a piece of property decreases by 10 percent while the

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