Question

Mr. Brown owned a house a house, which he rented for $60 a month. The house was assessed for $9000. In 1975 the rate of taxation was increased from $25 to $28 per $1000 assessed valuation. By what amount should the monthly rent have been raised to absorb the increase in that year's taxes?

Answer 1

We first calculate the percentage increase on the tax

Old value = 25×9 = 225 ⇒ The value 9 represents the 9 lots of thousands of the house's value
New value = 28×9 = 252

Increase in tax = 252 - 225 =27
Percentage increase = (27÷225) ×100 = 12%

The amount of yearly rent would be then increased by 12%

Monthly rent = $60
Yearly rent = 60×12 = $720
Increase by 12% = 720×1.12 = 806.4 ⇒ The value 1.12 is the multiplier, obtained from 100%+12%=112%=1.12

The monthly rent is 806.4÷12 = $67.20 which is an increase of $7.20 per month