A project requires a building permit with a valuation of $850,000. The permit fee structure is $5.00 per $1,000 for the first $100,000, then $3.50 per $1,000 for the remainder. What is the total permit fee?
Correct Answer
C) $3,125
First $100,000: ($100,000 ÷ $1,000) × $5.00 = $500. Remaining $750,000: ($750,000 ÷ $1,000) × $3.50 = $2,625. Total: $500 + $2,625 = $3,125.
Why This Is the Correct Answer
The permit fee calculation uses a tiered structure. For the first $100,000: ($100,000 ÷ $1,000) × $5.00 = $500. For the remaining $750,000: ($750,000 ÷ $1,000) × $3.50 = $2,625. Total permit fee is $500 + $2,625 = $3,125. This correctly applies the different rates to their respective value ranges.
Why the Other Options Are Wrong
Option A: $4,250
This answer incorrectly applies the higher $5.00 rate to the entire $850,000 valuation instead of using the tiered structure. The calculation would be ($850,000 ÷ $1,000) × $5.00 = $4,250, which ignores the lower rate for amounts over $100,000.
Option B: $3,750
This answer appears to use an incorrect rate or calculation method. It doesn't match either applying a single rate to the total valuation or correctly using the tiered structure with the given rates of $5.00 and $3.50 per $1,000.
Option D: $4,500
This answer suggests using an incorrect rate calculation. It's close to applying $5.00 to the first $100,000 and a higher rate to the remainder, but doesn't match the specified $3.50 rate for amounts over $100,000.
Memory Technique
Remember 'First 100 at FIVE, Rest at THREE-FIFTY' - apply $5.00 per $1,000 to first $100,000, then $3.50 per $1,000 to remainder.
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