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Thompson paid an annual property tax this year of $2,940. If the mill rate is 28, and the assessed ratio is 60 percent of market value, what market value did the assessor assign to the Thompson property?

Answer :

To find the market value assigned to the Thompson property, we can use the relationship between property tax, mill rate, assessed value, and market value. Here's how you can solve the problem step-by-step:

  1. Understand Key Terms:

    • Mill Rate: This is the amount of tax payable per thousand dollars of the assessed value.
    • Assessed Ratio: This is the percentage of the market value that the assessor uses to determine the assessed value.

  2. Formula:
    The property tax paid can be calculated using the formula:
    [tex]\text{Property Tax} = \left( \frac{\text{Mill Rate}}{1000} \right) \times \text{Assessed Value}[/tex]

  3. Calculate the Assessed Value:
    Given that the property tax paid is $2,940 and the mill rate is 28:
    [tex]2940 = \left( \frac{28}{1000} \right) \times \text{Assessed Value}[/tex]
    Solve for the assessed value:
    [tex]\text{Assessed Value} = \frac{2940 \times 1000}{28}[/tex]
    [tex]\text{Assessed Value} = 105,000[/tex]

  4. Determine Market Value:
    Since the assessed ratio is 60% of market value:
    [tex]\text{Assessed Value} = 0.60 \times \text{Market Value}[/tex]
    Substitute the assessed value:
    [tex]105,000 = 0.60 \times \text{Market Value}[/tex]
    Solve for the market value:
    [tex]\text{Market Value} = \frac{105,000}{0.60}[/tex]
    [tex]\text{Market Value} = 175,000[/tex]

Therefore, the market value assigned to the Thompson property is $175,000.

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Rewritten by : Barada