All categories

4 years ago

Why are capital appreciation bonds (CABs) a controversial way for local governments to finance projects?

Business

1 answer:

denis-greek [22]4 years ago

8 0

Answer:

See explanation section

Explanation:

Municipal security from which an investor will receive a return on investment from an initial principal is called a capital appreciation bond. However, in this security, the return on investment will be reinvested further until the security matures at a specific rate. The primary purpose of the CABs is to permit the local authority to generate revenue. Due to the financing in the innovative project without increasing the tax is one of the controversial ways for local governments to finance projects. Another controversial way is to owe investors more than what they acquired.

You might be interested in

The hotel manager received an offer to hold the local bikers' club annual meeting at the hotel in march, which is the hotel's lo

OleMash [197]

Given that this is the hotels low season, and this would be a definite increase in income that the hotel would not normally get, the hotel manager should accept. 45 suites at $100/ night for 3 nights is a nice $13,500. That would be a nice profit in their low season.

6 0

4 years ago

A stationery company plans to launch a new type of indelible ink pen. Advertising for the new product will be heavy and will cos

stich3 [128]

Answer:

The advertising spend would reduce income taxes by $2.8 million

Explanation:

The advertising expense since it is allowable expense from profits made in the year would reduce income taxes next year by $2.8 million ($8 million *35%)

This means that because of its tax deductibility,it would make a business sense to incur the advertising cost of $8 million coupled with the fact the it has the potential to increase sales revenue over and above the current level of $280 million

3 0

4 years ago

Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the foll

Andru [333]

Answer:

July's direct material flexible−budget variance is $ 1500.unfav

Explanation:

Genent Industries, Inc. (GII),

Budgeted quantity Budgeted price

Direct materials 0.3 pounds $20 per pound

Direct labor 0.7 hours $20 per hour

Actual Price for 15000 pounds and 2,875 DLH

Direct Materials $17 per pound

Direct manufacturing labor hours wages $20.50 per hour.

July's direct material flexible−budget variance is $ 1500. unfav

Budgeted Cost for 4000 containers -Actual Cost for 4000 containers

= $ 24000- $ 25500 = $ 1500

Since the actual cost is greater it is unfavorable

Flexible Budget Variance is obtained by subtracting actual costs from flexible budget costs at a given volume.

1 container requires 0.3 pounds

4000 containers require 0.3 * 4000= 1200 pounds

But actually 1500 pounds were used .

Now costs

Budgeted Costs for 1200 pounds is = 20 *1200= $24000

Actual Costs for 1500 pounds is = 17* 1500 = $ 25 500

8 0

3 years ago

A rectangular crate has the dimensions of 32.1 inches by 28.2 inches by 1 foot.

notsponge [240]

905.22
This is the Answer just did it with my teacher and said it was right

5 0

3 years ago

On January 1, 2021, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $101,600. The ending i

Lyrx [107]

Answer:

a. An additional layer of $12,760 is added to the 12/31/2021 balance.

Explanation:

The computation of the inventory balance is given below:

2021 Base year cost is

= $131,040 ÷ 1.05

= $124,800

Additional layer is

= $124,800 - $101,600

= $23,200

2022 Base year cost is

= $150,040 ÷ 1.10

= $136,400

Additional layer is

= ($136,400 - $124,800 ) × 1.10

= $11,600 1.10

= $12,760

Therefore the first option is correct

3 0

3 years ago