Due Date: 5/14/2012 11:59:59 PM CT Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time. Task Background: This Individual Project assignment serves as a summary of the key learning’s over the past 5 weeks of the course. In this course we have focused on the fundamentals of mathematics and how these topics relate to real world applications. In this project you will complete your key assignment. Parts I–III: Review and revise your Week 4 Individual Project as needed based on comments from your instructor. NOTE: Post these parts again even if you made no changes from the previous project.
Part IV: Sales Tax Sales tax on the purchase of a vehicle is calculated on the net purchase price (which is the total purchase price minus the amount allowed by a dealer for any trade-in). The rate of tax for residents in Denver, CO is as follows: Colorado state tax: 2.90% Regional transportation district (RTD) tax: 1.20% Denver city tax: 3.62%
Using the information above, answer the following:
What is the total sales tax to be paid in 2002 on the purchase of a 2002 passenger vehicle with a sales price of $17,000 and a $2,000 trade-in allowance?
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Net Purchase Price: 17,000
- trade-in: - 2,000
15,000
Total Sales Tax Rate: 2.90 + 1.20 + 3.62 = 7.72%
Total Sales Tax on Purchase: 7.72% of 15000 = $1158
How would the sales tax be distributed between the state, the RTD, and the city?
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2.9% of 15000 = 15000 x 2.9 / 100 = $435 to the State of Colorado
1.2% of 15000 = 15000 x 1.2 /100 = $180 to the RTD.
3.62% of 15000 = 15000 x 3.62 / 100 = $543 to the city of Denver
Part V: Property Tax Which job should you take?
After completing your degree, you have a choice between 2 jobs.
Suppose that you do not have a preference in location and have been given the following offers:
-----The first position is in Pennsylvania, earning $50,000 a year. You found a starter duplex that you can purchase with the assessed value of $75,000. Property taxes average 2.975% of the purchase price. The state sales tax is 6% on purchases, but this does not apply to food and clothing. The state income tax is 3%.
-----The second offer is in Maryland. You would earn $65,000, with a starter duplex assessed at $135,000. In Maryland, property taxes are 2.4% of the purchase price of the property. The sales taxes are 1% higher than in Pennsylvania, and it also applies to food and clothing. Maryland's state income tax is 1.5% higher than Pennsylvania's. You estimate your annual purchases are approximately $18,000, plus an additional $6,000 in food and clothing.
-----With the data above, complete the following table, with all values rounded to the nearest cent. [Note that the Difference column is the difference between Pennsylvania’s and Maryland’s values.]
-----(Hint: Property tax only applies to housing, state sales tax only applies to purchases and food and clothing when applicable, and income tax only applies to the salary):
----Tax PA MD; Difference: Salary, House Value, Purchases, Food and Clothing, Net Purchases, Property Taxes, Sales Taxes, State Income Taxes, Cost of Living
-----What is the difference in cost of living between the 2 locations based on the differences in sales tax, income tax, and property tax?
You estimate your annual purchases are approximately $18,000, plus an additional $6,000 in food and clothing
ANSWERS
Items for 1st Year / Item Rate for Pennsylvania / Item Rate for Maryland / Pennsylvania / Maryland / Difference(PA – MD)
Salary / $50,000.00 / $65,000.00 / -$15,000.00
House / $75,000.00 / $135,000.00 / -$60,000.00
Sales Tax on Annual Purchases other than food and clothing ($18,000) / 6% / 7% / $1080.00 / $1260.00 / -$180.00
Sales Tax on food and clothing ($6000) / 7% / $420.00 / -$420.00
Property Tax / 2.975% / 2.4% / $2231.25 / $3240.00 / -$1008.75
State Income Tax / 3% / 4.5% / $1500.00 / $2925.00 / -$1425.00
Total Tax / $4811.25 / $7845.00 / -$3,033.75
Cost of Living / -$29,811.25 / -$77,845.00 / $48,033.75
What factors will you consider when deciding which job to choose?
Well, truthfully, I would at schools, and what place I like better, which job has the nicer people and is more fun, and so on. But if these things were about equal, then I would look at my earnings.
Then Pennsylvania would seem to look better because I will not be as deep in debt as I would be in Maryland. The difference is $48,033.75
But that is not realistic. That is only for the first year. Once I own a house, I won’t have any payments to make on the houses. So I would need to look at the years to come.
Look at the next chart.
Items for Following Years / Item Rate for Pennsylvania / Item Rate for Maryland / Pennsylvania / Maryland / Difference(PA – MD)
Salary / $50,000.00 / $65,000.00 / -$15,000.00
Sales Tax on Annual Purchases other than food and clothing ($18,000) / 6% / 7% / $1080.00 / $1260.00 / -$180.00
Sales Tax on food and clothing ($6000) / 7% / $420.00 / -$420.00
Property Tax / 2.975% / 2.4% / $2231.25 / $3240.00 / -$1008.75
State Income Tax / 3% / 4.5% / $1500.00 / $2925.00 / -$1425.00
Total Tax / $4811.25 / $7845.00 / -$3,033.75
Cost of Living / $45,188.75 / $57,155.00 / -$11,966.25
What would be the better offer for you? Why? Explain in detail.
This chart shows that I would be coming out ahead in Maryland by $11,966.25 every year after the first year. In five years I will have made up for my loss in the first year:
4 x $11,966.25 = $59,831.25
After that, I will really start saving a lot more money in Maryland.
So that is the true better offer for me.