A property is assessed at $250,000. The tax rate is $2.50 per $100. What is the annual tax?

Option A ($5,000) is incorrect because it results from mistakenly multiplying the assessed value by the tax rate without first dividing by 100 ($250,000 × $2.50 = $625,000, then incorrectly dividing by 125). This error demonstrates a misunderstanding of how tax rates are applied per $100 of value.

Option C ($7,500) is incorrect because it results from an incorrect calculation method, such as adding the tax rate to the assessed value ($250,000 + $2.50 = $250,002.50) or misapplying the percentage calculation. This error shows a fundamental misunderstanding of how tax rates work.

Option D ($2,500) is incorrect because it represents only the first step of the calculation (dividing the assessed value by $100) without multiplying by the tax rate. This error demonstrates incomplete understanding of the two-step calculation process required for property tax determination.