A city is weighing the cost and benefit of the new convention center. The center would be accounted for in an enterprise fund. It would cost $20 million and would be funded from the proceeds of 20-year revenue bonds. Officials estimate that the center would generate $3.5 million each year and rental and other feet and would cost $1.6 million (excluding interest) to operate.

A.) Based on the limited amount of information, should the city district the convention center? Assume that the term of the bonds is indicative to the center is useful life and thats the cities cost of capital is 6%.

B.) Assuming that the city wear to construct the convention center, what would be the annual impact of revenue and expenses/expenditures ( expanding interest and other financing costs) of the following funds?

A. Convention center fund

B. General fund

C. Hotel occupancy tax fund

D. Utility fund