Centerville wants to build a new sports complex near the center of town. The complex will cost $250,000. There are two financing proposals:

Proposal A Issue $250,000 worth of bonds at an interest rate of 4 percent. The town will pay $10,000 per year in interest for 15 years. The total interest would be $150,000. The amount borrowed ($250,000) would have to be paid off in 15 years. Fees charged to users of the complex would pay the interest each year and the amount due bondholders ($250,000). Construction could begin right away.

Proposal B Establish a 1/4 percent city sales tax on all purchases. The revenue needed could be raised in about five years. There would be no user fee charged to residents of Centerville. Construction would be delayed for a few years.

What are the advantages and disadvantages of the two proposals?

Which proposal do you favor, and why?