On January 1, an Enterprise Fund Issues $1,000,000 of 6

question 23

Multiple Choice

On January 1, an Enterprise Fund issues $1,000,000 of 6%, ten-year tax-exempt bonds to finance the construction of a new water treatment plant. During the year, the Enterprise Fund earned $40,000 of interest income on the bond proceeds and incurred $600,000 of construction costs. What amount of interest cost should be capitalized for the year?

• A) $0.
• B) $20,000.
• C) $36,000.
• D) $60,000.

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Definitions:

Hydrograph

a graph showing the rate of flow (discharge) versus time past a specific point in a stream, river, or other channel.

Snowmelt

The runoff produced by melting snow.

Hundred-year Flood

is a term used to describe a flood event that has a 1% chance of occurring in any given year, used as a standard metric in flood risk assessment.

Probability

The statistical description of the likelihood that an event will occur.