Marloweville, with 20,000 residents, is deciding how to finance the construction of a new municipal stadium that will enhance both recreation and tourism in the area. The construction cost of the...

Marloweville, with 20,000 residents, is deciding how to finance the construction of a new municipal stadium that will enhance both recreation and tourism in the area. The construction cost of the stadium is $10 million. By law, all proceeds from debt issuance are placed in Marloweville’s Capital Projects Fund, and all capital expenditures are made using this fund.

1. Show how Marloweville would record the transaction(s) if it were to issue a $10 million bond and then use the proceeds to construct the stadium.

2. Show how Marloweville would record the transaction if it were to finance 50 percent of the construction with a municipal bond and 50 percent through a transfer from the Economic Development Fund (a governmental fund).

3. If, at the end of the fiscal year, Marloweville makes a loan repayment of $250,000 plus a $50,000 interest payment, the total expenditure for the transaction will equal

a. $0.

b. $250,000.

c. $50,000.

d. $300,000.