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1-1 Budgeting practices that satisfy cash requirements may not promote interperiod equity.

1-1 Budgeting practices that satisfy cash requirements may not promote interperiod equity.


a. The authority’s governing board levies property taxes at rates that will be just sufficient to balance the authority’s budget. What is the amount of tax revenue that it will be required to collect?

b. Assume that in the authority’s second year of operations, it incurs the same costs, except that it purchases no new equipment. What amount of tax revenue will it be required to collect?

c. Make the same assumption as to the tenth year, when it will have to repay the bonds. What amount of tax revenue will it be required to collect?

d. Comment on the extent to which the authority’s budgeting and taxing policies promote interperiod equity. What changes would you recommend?

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