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    Effect of Refunding of Debt Obligation

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    Only need assistance with part "B". Please review the attached simulation in order to complete. Please include references.

    Before meeting with the Learning Team, each individual team member should run the "Accounting for Governmental Funds" simulation. As a team, prepare a paper that includes the following:

    a. Discuss how the debt capacity of a governmental entity is determined.
    b. Evaluate the effect of refunding or reorganizing existing debt obligations.
    c. Analyze various funding alternatives that can be used to support debt obligation.
    d. Describe how rating agencies evaluate governmental risk.

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    Solution Preview

    The response address the queries posted in 619 words with references.
    //As per the requirement of given problem, we will focus on part B only, which is related to the effect of refunding and re-organizing existing debt obligations. First of all, we will describe the term 'Debt Obligation' and then, we will evaluate the effect of refunding of existing debt obligation. The effect on the business, on public will be evaluated, so that it could be understood more clearly.\

    Debt obligation is the liability of a person. In the case of accounting for a governmental fund, the government issues the term bond to finance the project of bridge construction. The interest on the term bond is payable at maturity. The government is refunding the amount through provision accounts. A particular amount is deposited in this account till 20 years and then, it is used for the payment of debt obligation. The interest rate on the term bond is 8%, which is higher than the serial bonds. The revenue from the toll tax ...

    Solution Summary

    The response address the queries posted in 619 words with references.