Required: Compute the new well's net present value. Should the governing board approve the ne Note: Round your final answer to the nearest dollar amount. Net present value Approve? Yes
Required: Compute the new well's net present value. Should the governing board approve the ne Note: Round your final answer to the nearest dollar amount. Net present value Approve? Yes
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sh11
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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 $3,051 and save the school $540 annually for 10
years. The school's hurdle rate is 8 percent.
Use Appendix A for your reference.
Note: 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?
Note: Round your final answer to the nearest dollar amount.
Net present value
Approve?
Yes
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