Which of the Following Would Be Accounted for as a Permanent

question 32

Multiple Choice

Which of the following would be accounted for as a permanent fund?

• A) A gift of $500,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city cemetery
• B) A gift of $500,000 to a city, to be invested permanently, with the proceeds to be distributed as scholarships
• C) A gift of $500,000 to a city, to be invested permanently, with one half of the proceeds added to principle each year and the remainder to be used for low income housing
• D) A gift of $500,000 to a city to be used for a new caretaker's residence at the local cemetery

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Definitions:

WACC

A measurement called the Weighted Average Cost of Capital assesses the cost of a business's capital, where every capital category is assigned a proportional weight.

Capital Structure

The particular combination of debt and equity that a company uses to finance its overall operations and growth.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value.

Market Price

The current price at which an asset or service is bought or sold in the marketplace.