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 $7,374 and save the school $1,200 annually for 10 years. The school’s hurdle rate is 8 percent.
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 $7,374 and save the school $1,200 annually for 10 years. The school’s hurdle rate is 8 percent.
Required:
Compute the
Questions?
Internal Rate of Return: __________
Approve? Yes or No
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