Is government grant an asset? – Usagovernmentgrants.Org Scammer Photos

Why would it provide an asset and not an obligation? (If government grants an asset, then why should not the value of this granted asset have “interest”? ) Note that if there are no interest payments, we have two problems with a given transaction. (1) If the government grant is an obligation, the property owner has no incentive to redeem the asset. (2) If the value of the grant increases over time, the owner has no incentive to redeem it because the government has “gifted” it to them. These are serious problems, and can be illustrated by a typical example of a public utility. Suppose that XYZ is a public utility and that the cost of providing power to the town is $500. An investor purchases power at $100 per megawatt hour (MWh, or one million kWh) and sells it at $400 per MWh. The $400 is the cost of supplying electric power to the town. If the investor purchases power at $100, he has an incentive to invest some of the $700 profit from the sale of power into a new business or into an investment with an increased return. In addition, if the investor’s return on the investment is greater than the cost of the new business, he has more incentive to reinvest the $700 into a business of this nature or to obtain capital assistance for his own new business. The investor’s incentive to reinvest will increase. On the other hand, if the investor owns the power at $400 rather than at $500, he has more incentive to sell his energy to the utility at a higher rate (or to pay a lower rate). If the value of the power at $400 is increased over time by only 1.5%, and the utility owns power at $400, the investor will receive this added value on a market valuation of $500. If the total value of the power purchased at $100 is reduced to $100/MWh and the total value of the utility’s revenue is reduced from $200, the additional value of property at $400 will be more than $1,000, and the investor will have more incentive to reduce the price of electric power in order to increase his capital. (Note that an employee’s compensation may be lower than the market value of the employee’s work, so the incentive to invest may be lower.)


Consider a second case: we have a property owner with $1,000,000, whom we grant a bond, in payment of property tax and mortgage payments. The property owner purchases

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Is government grant an asset? – Usagovernmentgrants.Org Scammer Photos
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