A village's legal debt limit is $20 million.Its outstanding general obligation debt is $9 million.The full value of its real property is $520 million,which includes $40 million of property that is exempt from taxation.What is the village's debt burden?

Question

Quizplus · Accepted Answer

The village's taxable property value is $480 million ($520 million - $40 million). To find the village's debt burden, we divide its outstanding debt by its taxable property value: 
Debt burden = ($9 million / $480 million) x 100% = 1.875%. 
Since this is less than the legal debt limit of 2% (20 million / 1 billion), the village is not in violation of its debt limit. 
Thus, the answer is (B) 1.9%.

A Village's Legal Debt Limit Is $20 Million