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A Dilemma From the Good Old Days.....

In a city, a desirable building lot for a house costs $2200; a few miles outside the city limits, a lot equally desirable as to size costs $600. Suppose a house costing $6500 is built on each of these lots. In the city, the tax rate is 2.5% on the actual cost; outside the city, the tax is 1.8% on the cost. Transportation is $8.50 per month less for the city house. Figuring interest on the investment at 6%, which is the cheaper house to occupy? Find the difference for one year.


Source: N.J. Lennes' Practical Mathematics, 1936, 159