Why should not the city of Houston issue a bond for 2 million dollar Essay

Why should not the city of Houston issue a bond for 2 million dollar - Essay Example dollar bond wherein investors can be bondholders so that they can pay the city coupons of interest from the two million dollars, making a profit for the city of Houston. To make a profit as an alternative source of capital is just one advantage of issuing bonds. Aside from that, bonds can be used as Leverage; the coupons that are usually paid every three, six, or twelve months are a flexible way to make payments easier by making less payments fit the situation. Also, there is an option to create a fixed interest rate that is unaffected by changes. Aside from being a benefit, there are also some risks and challenges when issuing bonds. Bonds are a form of debt. These debts are financial risks that leave the issuer (in this case, the city of Houston) payment obligations that are enforced by the law. They have to make these payments no matter what financial state they may be in. Compared to shares that may not be paid when it the issuer lacks money, these bonds can create financial problems for the issuer. There is also a refinancing risk wherein the issuer would need to get capital once bonds mature. This might be a problem if interest rates have been increasing, causing the issuer to possibly refinance at a higher rate. The large bullet payment of the principal at a bond’s maturity is a possibly large amount that may be difficult to pay if the principal payment is delayed. The administrative cost of handling the transactions can also be a burden, unlike a loan wherein the details are confidential; bond issuers have to d isclose some details to the public as requirements by the CMD and other regulatory authorities. Bonds are also treated and taxed as income to the shareholder. To keep the bond attractive to bondholders, the issuer has to compensate for the taxes. These are the reasons why Houston should not issue bonds. It is a risk and requires planning and manpower. The administrative cost has to be prepared before issuing the bonds; there has to be a failsafe

Finance in Hospitality Industry Assignment Example | Topics and Well Written Essays - 2500 words

Finance in Hospitality Industry - Assignment Example The businessperson can apart with money to put into the business. This could include savings or start up capital. This method of approach ensures that the person has complete ownership of the business. External sources are another option to funding. There is several of this kind of funding. Bank loan is one example. Banks can offer one capital to fund a business. The loan repayment is spread over a long period of time and one has to pay interest. One can have additional partners when starting a business. An individual may decide to team up with another person in the business venture. The new partner usually pays more capital than the individual. I would go for owner’s capital Friends and family may also be a source of external funding. Family can invest in a business with little or no interest. They can support an individual in the business venture without making demand for shareholding .Small Business Administration (SBA) can generate funds for business setup. In this method the individual access loans that are provided for by the federal government The amount of interest is minimal in SBA’s. The best sourcing for me could be family and friends. Interests, security and shareholding are not demanded for with the approach. To add on, the family can offer counsel and support during the business initiation. Generating income in hotel Business. Venturing in business is usually for the purposes of income generation. Various businesses employ a variety of methods to realize the optimal profits. The enterprises engage in various forms of generation .Fee for service, selling of products, membership dues, tangible and untangible assets are ways that money is earned in an institution. The hospitality industry also can employ these strategies to make economic gain. Services can be sold as a way of making money. Catering services can be provided for by hotels in different contexts .Eatery services can be offered within the organization. Customers visit the ho tel and get food and drinks for which they are charged .Hotels can cater for wedding sand parties in the neighborhood and make profits. Catering services can be taken to institutions of learning by the hotels and the administration reciprocates the service by paying up. Tangible assets can also be used to gain profits. Leasing and renting out of assets such as space, equipment and land. The hotel can hire out rooms for conferences and workshops to other organizations. This ensures that they make for the leasing and the assets remain their own. Space for hosting events such as parties and weddings can also make up for income generation. The grounds can be well lawn and presentable. Consumers can therefore rent the place and pay up for the amount of time they use the place. Furthermore, boarding services can be provided for. The consumers are offered spaces to sleep for a levy .Investment and dividends can offer funds for an organization. The hotel can enroll in the stock exchange and gain accrued interests with time. This is the passive way of income generation as the stakeholders are not directly involved in money making. TASK 2 Costs, gross profit percentages and selling prices fort products and services are important in mapping out a company’s progress. Cost can have various elements to it that need to be considered. These elements include; revenue, Cost of goods sold, formula as well as management. Revenue refers to as ‘sales ‘in companies. This is the receipts and debits over a certain