Ask Question
BusinessBusiness
24 April, 15:11

The government of Happyland collects $100 million in taxes each year and currently has a public debt of $1.2 billion, which it finances by issuing Treasury bonds that pay 8% per year. Is this a manageable level of debt for the government of Happyland

+5
Answers (1)
  1. 24 April, 15:32
    0
    No, the debt is not manageable because interest payments equal $96 million per year.

    Explanation:

    Annual interest payment for debt = 0.08*1.2B = $96 million

    Only the interest payment is about 96% of government revenue, so its not manageable.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The government of Happyland collects $100 million in taxes each year and currently has a public debt of $1.2 billion, which it finances by ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
In accounting for uncollectible receivables, the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method? A. direct write-off methodB. percentage of sales methodC.
Answers (1)
Your homework routine should include all of the following except
Answers (2)
Which one of the following would probably benefit the most from personal financial planning services? Question 9 options: A / Wealthy individuals who may face estate tax liabilities B / Older persons nearing retirement and needing to know what their
Answers (1)
Since almost everyone makes decisions at work, that qualifies them to be categorized as managers. (T/F)
Answers (1)
Depreciation on equipment for the year is $6,300. Required: (a) Record the journal entry if the company prepares adjustments once a year on December 31. Refer to the Chart of Accounts for exact wording of account titles.
Answers (1)
New Questions in Business
What is trade discount
Answers (2)
Which country has experienced a doubling of its diabetes rate in the past 4 decades?
Answers (1)
One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.
Answers (1)
Mike gets angry because Ben made a better grade on a test than he did. They get into an argument, and Mike takes a swing at Ben intending to hit him. Ben shoves Mike in order to avoid the blow.
Answers (1)
A company facing an interest rate of 8% must choose among projects offering the following four-year cash flows.
Answers (1)
Home » Business » The government of Happyland collects $100 million in taxes each year and currently has a public debt of $1.2 billion, which it finances by issuing Treasury bonds that pay 8% per year.
Sign Up Forgot Password?