Exercise 16-24 Net Present Value (Section 1) (LO 16-1) 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 $3,125 and save the school $620 annually for 10 years. The school's hurdle rate is 8 percent. 10 points Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) eBook 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.) Print References Net present value Approve? Exercise 16-25 Internal Rate of Return (Section 1) (LO 16-1) 2 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 $4,697 and save the school $700 annually for 10 years. The school's hurdle rate is 6 percent. 10 points Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) eBook Required: Compute the internal rate of return on the new well. Should the governing board approve the new well? Print Internal rate of return Approve? References Future Value and Present Value Tables Table ! Future Value of $100(1+i)" Period 4% 6% 8% 10% 12% 14% 20% 1 1.040 1.060 1.030 1.100 1.120 1.140 1.200 2 1.082 1.124 1.166 1.210 1.254 1.300 1.440 3 1.125 1.191 1.260 1.331 1.405 1.482 1.728 4 1.170 1.263 1.361 1.464 1.574 1.639 2.074 5 1.217 1.338 1.469 1.611 1.762 1.925 2.438 6 1.265 1.419 1.587 1.772 1.974 2.195 2.936 7 1.316 1.504 1.714 1.949 2.211 2 502 3.583 S 1.369 1.594 1.851 2.144 2.476 2.853 4,300 9 1.423 1.690 1.999 2.359 2.773 3.252 5.160 10 1.480 1.791 2.159 2.594 3.106 3.707 6.192 11 1.540 1.898 2.332 2.353 3.479 4.226 7.430 12 1.601 2012 2.518 3.139 3.896 4.SIS 8,916 13 1.665 2.133 2.720 3.452 4.364 5.492 10.699 14 1.732 2.261 2.937 3.798 4.887 6.261 12.839 15 1.801 2.397 3.172 4.177 5.474 7.138 15.407 20 2.191 3.207 4.661 6.728 9.646 13.743 38.338 30 3.243 5.744 10.063 17.450 29.960 50.950 237.330 40 4.801 10.236 21.725 45.260 93.051 188.880 1.469.800 Table II (1 + r) - 1 Future Value of a Series of $1.00 Cash Flows (Ordinary Annuity) 4% 0% 12% Period 1 2 10% 1.000 20% 1.000 1.000 1.000 2.040 3.122 6% 1.000 2.060 3.184 14% 1.000 2.140 1.000 2.080 3.246 4.506 2.100 3.310 2.120 3.374 2.220 3.6-10 3 3.440 4 4.641 4.247 5.416 4.375 5.637 4.779 6.353 4.921 6.610 5.368 7.442 5 5.367 6.105 6 7336 S.536 9930 S.115 10.089 7 8.923 6.975 S.394 9.898 11.491 7.716 9.487 11.436 12.916 16.499 3 10.730 13.233 16.085 10.637 12.488 14.457 12.300 14.776 9 10 6.633 7.898 9.214 10.583 12.006 13.486 15.026 16.627 13.292 20.024 13.580 15.938 18.531 17.549 20.655 20.799 25.959 32.150 39.580 11 12 24.133 13.131 14.972 16.870 18.882 21.015 23.276 16.646 18.977 21.495 24215 13 14 21.385 24.523 27.976 31.773 28.029 32.393 37250 19.337 23.045 27.271 32.059 37.581 43.842 91.025 356.790 1.342.000 15 27.152 43.497 59.196 72.035 186.690 1.181.900 7.343.900 20 29.778 45.762 57.276 30 36.778 79.058 154.762 56.085 95.026 113.283 164.496 442 597 75.052 241.330 767.090 40 259.057 Table III Present Value of $1.00 1 Period 4% 6% 8% 10% 12% 14% 16% 10% 20% 22% 24% 26% 20% 30% 32% 1 909 S06 .794 .769 962 925 943 S90 926 .857 1893 .797 .877 .769 .862 .743 .847 1718 833 694 S20 672 .781 .610 2 .826 .650 .630 592 .758 574 435 1329 389 .641 579 524 3 4 340 .792 .747 794 735 .751 .683 621 .712 .636 .675 .592 519 .609 516 .855 822 551 451 423 552 476 .482 402 500 397 315 477 373 291 455 350 .269 S .651 567 437 370 341 250 6 -564 410 335 790 .760 731 .705 665 .627 630 583 540 7 .507 452 .404 227 .178 456 .400 351 207 .159 189 .143 513 S .467 424 370 1314 266 .225 .191 354 305 .263 .227 279 233 194 303 .249 204 . 167 .137 275 222 179 144 116 .123 250 198 .157 125 099 9 .500 .703 .676 592 558 361 322 .308 .270 .139 . 108 .085 094 .073 . 108 082 .062 10 463 386 .162 11 .650 527 .429 .237 .195 .112 094 .066 076 12 13 052 .625 601 .287 257 .229 497 469 .350 .319 .290 263 .239 .168 145 397 368 340 315 .162 .137 .116 .099 205 .182 .160 140 .135 112 093 078 065 040 092 .075 .062 051 079 062 .050 .039 031 .056 .043 033 .025 .020 .047 .036 .027 021 016 14 .061 .049 040 ,205 .125 577 555 032 15 .417 .183 105 .034 025 20 312 .019 014 .005 004 456 308 208 215 149 -104 .073 .099 .057 .033 .020 046.022.01.005 026 .004 30 OSI 037 .012 .007 .003 .001 010 .001 007 .001 174 097 .003 .002 40 001 - - Table IV Present Value of Senes or $1.00 Cash Flows (1 1 (1 + ") Period 4% 3% 10% 12% 14% 16% 20% 22% 24% 25% 26% 20% 30% 1 0.943 0.926 0.909 0.862 0.820 0.877 1.647 18% 0.847 1.566 2.174 0.781 1.392 0.769 1.361 2 1.833 1.605 1.492 0.962 1.886 2.775 3.630 4.452 1.783 2.577 1.736 2,487 0.806 1.457 1.981 3 0.893 1.690 2.402 3.037 3.605 2.322 0.833 1.528 2.106 2.589 2.991 2.0412 2.673 3.465 4.212 2.246 2.798 0.800 1.440 1.952 2.362 2.689 1.816 0.794 1424 1.923 2.320 2.635 3.312 4 5 2.166 3.170 3.791 2.914 3.433 2.690 3.127 2.494 2.864 1.868 2.241 2.532 2.404 2.745 3.993 3.274 2.436 4.111 3.167 2.643 6 7 5.242 6.002 4.917 5.582 6.210 6.802 4.623 5.206 5.747 6.247 4.355 4.868 5.335 5.759 6.145 3.859 4.288 4.639 4.946 3.685 4.039 4.344 4.607 4.564 4.965 5.328 5.650 3.326 3.605 3.837 4.031 S 3.498 3.812 4,078 4.303 4.494 6.733 3.020 3.242 3.421 3.566 3.416 3.619 3.786 2.951 3.161 3.329 3.463 3.571 2.759 2.937 3.076 3.184 2.335 3.083 3.241 3.366 3.465 2.802 2.925 3.019 9 7,435 S.111 10 7.360 6.710 5.216 4.833 4.192 3.923 3.682 3.269 3.092 11 8.760 7.139 3.544 3.147 5.938 6.194 4.035 4.127 3.776 3.851 5.029 5.197 3.342 3.656 3.725 12 4.656 4.793 4.910 3.335 3.387 7.887 8.354 8.853 9.295 9.712 6.495 6,814 7.103 7.367 7.606 13 5.453 5.660 5.842 6.002 6.142 3.190 3.223 4.327 4.439 4.533 4.611 9.335 9.986 10.563 11.118 6.424 7.536 7.904 8.244 8.559 4,203 3.780 3.606 3.656 3.695 3.726 6,625 14 15 5.463 5.575 5.00 5.092 3.912 3.962 4.001 4.265 4.315 3.824 3.859 3.427 3.459 3.483 3.249 3.268 6.811 4.675 8.514 3.546 20 30 13.590 17.292 19.793 11.470 13.765 15.046 9.818 11.258 11.925 7.469 8.055 8.244 6.623 7.003 5.929 6.177 9.427 9.779 5.353 5.517 5.545 4.870 4.979 4,460 4.534 4.544 4.110 3.954 4.160 3.995 4.166 3,999 3.808 3.842 3.846 3.569 3.571 3.316 3.332 3.333 40 7.105 6,234 4.997