Tab 1: Newspaper article
The Republic of Krovania’s development authority is planning to develop its nine underdeveloped cities. The authority wants to determine how much money each city needs to fund the upcoming development projects. The authority expects to fund the development projects through four sources of funding – state funding, collected in the form of taxes from its citizens; private funding, in the form of revenue generated by the private use of city owned infrastructure; donations from wealthy citizens; and Federal funding. The authority’s objective is to utilize the funding from State and Private Sources, while minimizing the dependency on Federal Sources.
A few cities have received generous donations from high net worth citizens; however, this money is not regular and thus excluded in calculating the funding for these long term development projects. A city is considered inadequately funded if its funding (excluding federal funding sources) covers less than 90% of the city’s projected development expenses. Any surplus funding from state and private sources are deposited in the federal pool of funds used for development projects for the nine cities and may be reallocated among the inadequately funded cities. After the surplus funds are allocated, the federal resources will be used to fund up to 10% for an adequately funded city’s expenses or the amount needed to reach 100% funding, whichever is smaller. Tab 2: Data
Krovania’s 9 underdeveloped cities are under consideration. For every city, the table lists expected funding from different sources – state funding and private funding. The table also lists the percentage of development expenses that the cities expect to cover from private and state funding. Moreover, the table also lists the maximum amount of federal funding that it can receive. This funding can be used by a city if it is not able to meet the development expenses from the state and private funding sources. All amounts are in million Krovanian dollars.
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1) Approximately how much surplus amount will be allocated to the federal pool of funds to be shared among the inadequately funded cities? All answers are in million Krovanian dollars.
2) For each of the following statements, all of which refer to the 9 cities discussed in the prompt, select Yes if the statement can be shown to be true using the information provided. Otherwise, select No.
Statement 1: The amount of federal sources given to city C as a percentage of total funding needed by the development projects of that city is more than that given to the development of city A.
Statement 2: Development projects of more than 40% of the cities are inadequately funded.
Statement 3: The federal funding allocated for the nine cities will not be exhausted, even after allocating the necessary funds to the inadequately funded cities.
3) Suppose that the surplus funds from the adequately funded cities are not to be used for the inadequately funded cities and the additional funding is through other Federal sources. Then what is the approximate amount of funds is remaining with the federal sources after funding the inadequately funded cities (excluding the surplus funds from the adequately funded cities). All answers are in million Krovanian dollars
4) Due to a recent change in the Republic of Krovania’s budget, state funding will get an additional 20% from the tax increase. With this new information, will the development projects of the following cities require additional funding? Select Yes if the city would still be funded from additional sources, otherwise select No.
City 1: Green Town
City 2: Coni
City 3: Ilica
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