Question

# The Franklin Family wants to buy a home. They narrowed the choice down to a \$125,000...

The Franklin Family wants to buy a home. They narrowed the choice down to a \$125,000 home in Louisville and a \$138,000 home in Big Creek. With regard to property taxes, Louisville has an assessment rate of 100% and a tax rate of \$1.85 per \$100 of assessed value, while Big Creek has an 80% assessment rate and a tax rate of 21.6 mills. Determine which house has the higher property tax, and by how much? Round to the nearest cent.

Calculation of Property Tax in Louisville

Assessment Rate of 100% on \$125000 = \$125000

Per \$100 of assessed value = 125000 / 100 = \$1250

Property Tax = \$1.85 * 1250

= \$2312.5

Calculation of Property Tax in Big Creek

Assessment Rate of 80% on \$138000 = .80 * 138000

= \$110400

Tax Rate = 21.6 mills

21.6 mills to dollars = 21.6 / 1000 = .0216

Thus Property Tax = .0216 * \$110400

= \$2384.64

Thus House in Big Creek has higher property tax of \$2384.64

Difference = 2384.64 - 2312.5

= \$72.14

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