THE CONNECTICUT VALLEY SCHOOL The Connecticut Valley School (CVS) is a private boarding school in Massachusetts Headmaster John Loring has just submitted his annual recommendations for capital spending to the board of trustees. Capital spending will be funded from two sources new debt and the accumulated interest on the school's endowment. Since the school is approaching its debt capacity and the trustees are determined not to draw on the principal of the endowment, the school can afford to spend only $900,000 to $1,000,000 on capital improvements over the next year The seven major projects under consideration are described briefly below. Swimming Pool Expected life: 15 years ost Currently the school rents a local facility for $60,000 per year. In addition the school pays $10,000 per year to bus students to the facility If the school owned its own pool, it could rent out pool time to local organizations for $30,000 per year. The headmaster feels that more students would use the pool i it were located on campus. Buses Cost: $270,000 (3 buses) Expected life 6 years Salvage value 000 CVS owns two campuses several miles apart A private bus company transports students between campuses at a cost of $180,000 per year. If the school owns and operates its own buses, it will incur $80,000 in operating expenses each year 3. New Roof for Hockey Rink Cost: $60,000 A new roof is essential to prevent further damage to the rink and to the arena's infrastructure The project could be delayed one year. but due to the additional damage that would result, total repair costs would jump to $120,000. Wood Chi Heat in System Expected life 15 years Cost: $800,000 cold New England winters and the high cost of fuel oil have been draining the school's operating funds This new heating system could save the school between $140,000 and $160,000 per year over the next 15 years assuming that the school defrayed fuel costs by harvesting $30,000 of wood each year from its own land rather than purchasing this fuel on the market)