Contrasting desirability of alternatives of capital project

Reference no: EM1340257

Q1) 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.

Reference no: EM1340257

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