Explore BrainMass

Explore BrainMass

    Gov and NPO scenario: Capital Project Consideration

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Johnstown is considering a capital project. For each of the following legally feasible alternatives, compare and contrast the desirability of each from the viewpoint of (1) the official in charge of administering capital projects funds, and (2) taxpayers residing in the governmental unit.

    a) $5,000,000 face value of 10-year special assessment bonds can be sold at 98 with a semiannual interest at the normal annual rate of 6 percent. The discount would be borne by a debt service fund.
    b) Same as item a above, except the discount would be borne by the capital projects fund.
    c) Same bond issue can be sold at 103 with semiannual interest at the nominal rate of 9 percent; the premium would be transferred to the debt service fund.
    d) Same as item c above, except the premium would be retained by the capital projects fund.

    © BrainMass Inc. brainmass.com March 4, 2021, 7:51 pm ad1c9bdddf

    Solution Preview

    From the viewpoint of the official in charge of administering the capital projects fund:
    Under possibilities (a) and (c) the capital projects fund receives the amount authorized from the bond issue.

    Under (b), the fund receives $100,000 less than the amount authorized.

    Under (d), the fund receives $150,000 more than originally ...

    Solution Summary

    Provides answers to four scenarios from two perspectives: the official in charge and the taxpayer.