Jack and Jills Place is a nonprofit nursery school run by the parents of the...
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Jack and Jills 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 schools governing board is considering drilling a new well (at the top of the hill, naturally). The board estimates that a new well would cost $1,229 and save the school $200 annually for 10 years. The schools hurdle rate is 9 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?
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