This is GMT question the answer is D. but I am little bit confused if someone know please solve this question I will be grateful to you .
Q - If the value of a piece of property decreases by 10 % while the tax rate on the property increases by 10 %, what is the effect on the taxes?
a) Taxes increases by 10 %
b) Taxes increases by 1 %
c) No change
d) Taxes decreases by 1 %
e) Taxes decreases by 10 %
Let say Price is P,
Price increase rate is I = 10%
Tax is T = 10%
then formula to calculate the tax should be
= P - ( P x I ) ] x T
If you caclulate the tax using this formula and then the simple tax calculating formula i.e.
= P x T
then there should be difference of 1% from actual price.
I hope it makes some sense.
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I think this belongs in the C&A section. Don't you think! :)