HW_Ch_1-2 Solutions

HW_Ch_1-2 Solutions - E xercises EX 1-1 1. a 2. c 3. c 4. c...

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Exercises EX 1-1 1. a 2. c 3. c 4. c 5. b 6. c 7. d 8. c 9. b 10.c EX 1-2 1. b 2. b 3. d 4. b 5. a 6. c 7. a 8. b 9. a 10.b
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Problems P. 1-1. a. The authority’s cash requirements in Year 1 would be as follows (in millions): Wages, salaries and other operating costs $6.0 Purchase of equipment $10.0 Less: Issuance of bonds 10.0 0.0 Interest on bonds 0.5 Purchase of additional equipment 0.9 Total cash outlays (revenue requirements) $7.4 b. In Year 2, they would be: Wages, salaries and other operating costs $6.0 Interest on bonds 0.5 Total cash outlays (revenue requirements) $6.5 c. In Year 10, they would be: Wages, salaries and other operating costs $6.0 Interest on bonds 0.5 Repayment of bonds 10.0 Total cash outlays (revenue requirements)$16.5 d. The budgeting and taxing policies fail to promote interperiod equity. The economic costs incurred by the authority — the wages, salaries, other operating costs, and portion of equipment consumed — were the same each year. Yet, tax payments will depend on when the equipment was purchased and when the
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HW_Ch_1-2 Solutions - E xercises EX 1-1 1. a 2. c 3. c 4. c...

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