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Appendix A is below: Future Value of a Series of $1.00 Cash Flows (Ordinary Annuity) n(1+r)n1 Jack and Jill's Place is a nonprofit nursery school
Appendix A is below:
Future Value of a Series of $1.00 Cash Flows (Ordinary Annuity) n(1+r)n1 Jack and Jill's Place is a nonprofit nursery school run by the parents of the enrolled children. Since the school is out of town, it has a well rather than a city water supply. Lately, the well has become unreliable, and the school has had to bring in bottled drinking water. The school's governing board is considering drilling a new well (at the top of the hill, naturally). The board estimates that a new well would cost $4,916 and save the school $800 annually for 10 years. The school's hurdle rate is 7 percent. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: Compute the internal rate of return on the new well. Should the governing board approve the new well? Exercise 16-24 Net Present Value (Section 1) (LO 16-1) Jack and Jill's Place is a nonprofit nursery school run by the parents of the enrolled children. Since the school is out of town, it has a well rather than a city water supply. Lately, the well has become unreliable, and the school has had to bring in bottled drinking water. The school's governing board is considering drilling a new well (at the top of the hill, naturally). The board estimates that a new well would cost $3,275 and save the school $680 annually for 10 years. The school's hurdle rate is 8 percent. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: Compute the new well's net present value. Should the governing board approve the new well? (Round your final answer to the nearest dollar amount.) Future Value and Present Value Tables Table III Present Value of $1.00(1+r)n1 r1(1(1+rn)1)Step by Step Solution
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