Required: Compute the internal rate of return on the new well. Should the governing board approve the new well? Internal rate of return Approve? %
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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 $7,374 and save the school $1,200 annually for 10 years. The school's hurdle rate is 8 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? Internal rate of return Approve? Yes %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 $3,325 and save the school $700 annually for 10 years. The school's hurdle rate is 8 percent. Use Appendix A for your reference. (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? (Round your final answer to the nearest dollar amount.) Net present value Approve? YesJack 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 $2,825 and save the school $500 annually for 10 years. The school’s hurdle rate is 8 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?
- The town of Arrieta has decided to have an sculptor create a statue of their town founder, Arrieta Daniels. They also plan to build a small garden around the statue in the town square. The total cost for the statue and garden construction will be $65000.Replanting flowers and other garden maintenance is budgeted at $600 per year. The statue and garden are expected to last forever but the statue will need repairs and cleaning every 4 years at an estimated cost of $2000.If Arrieta has an MARR of 7.5% per annum, what is the present worth of costs for the project?A project is being considered by the Tennessee Department of Transportation to replace an aging bridge across the Cumberland River on a state highway. The existing two-lane bridge is expensive to maintain and creates a traffic bottleneck because the state highway is four lanes wide on either side of the bridge. The new bridge can be constructed at a cost of $300,000, and estimated annual maintenance costs are $10,000. The existing bridge has annual maintenance costs of $18,500. The annual benefit of the new four-lane bridge to motorists, due to the removal ofthe traffic bottleneck, has been estimated to be $25,000. Conduct a B–C analysis, using aMARR of 8% and a study period of 25 years, to determine whether the new bridge should be constructed.Fifteen families live in Willow Canyon. Although several water wells have been drilled, none has produced water. The residents take turns driving a water truck to a fill station in a nearby town. The water is hauled to a storage tank in Willow Canyon. Last year truck and water expenses totaled $6200. What rate of return would the Willow Canyon residents receive on a new water supply pipeline costing $100,000 that would replace the truck? The pipeline is considered to last (a) Forever. (b) 100 years. (c) 50 years. (d) Would you recommend that the pipeline be installed? Explain
- A project is being considered by the Tennessee Department of Transportation to replace an aging bridge across the Cumberland River on a state highway. The existing two-lane bridge is expensive to maintain and creates a traffic bottleneck because the state highway is four lanes wide on either side of the bridge. The new bridge can be constructed at a cost of $300,000, and estimated annual maintenance costs are $10,000. The existing bridge has annual maintenance costs of $18,500. The annual benefit of the new four-lane bridge to motorists, due to the removal of the traffic bottleneck, has been estimated to be $25,000. Conduct a B-C analysis, using a MARR of 8% and a study period of 25 years, to determine whether the new bridge should be constructed.The council members of a small town have decided that the earth levee that protects the town from flooding should be rebuilt and strengthened. The town engineer estimates that the cost of the work at the end of the first year will be $68,000. He estimates that in subsequent years the annual repair costs will decline by $7000, making the second-year cost $61,000; the third-year $54,000, and so forth. The council members want to know what the equivalent present cost is for the first 5 years of repair work if interest is 6%.A large mudslide caused by heavy rains will cost Sabino County $1,000,000 per occurrence in lost property tax revenues. In any given year, there is one chance in 100 that a major mudslide will occur. A civil engineer has proposed constructing a culvert on a mountain where mudslides are likely. This culvert will reduce the likelihood of a mudslide to near zero. The investment cost would be $50,000, and annual maintenance expenses would be $2,000 in the first year, increasing by 5% per year thereafter. If the life of the culvert is expected to be 20 years and the cost of capital to Sabino County is 7% per year, should the culvert be built?
- The city council wants the municipal engineer to evaluate three alternatives for supplementing the city water supply. The first alternative is to continue deepwell pumping at an annual cost of $10,500. The second alternative is to install an 18-inch pipeline from a surface reservoir. First cost is $25,000 and annual pumping cost is $7000. The third alternative is to install a 24-inch pipeline from the reservoir at a first cost of $34,000 and annual pumping cost of $5000. The life of each alternative is 20 years. For the second and third alternatives, salvage value is 10% of first cost. With interest at 8%, which alternative should the engineer recommend? Use present worth analysis.A city is evaluating the installation of a garbage incinerator on the outskirts of town. The cost of the unit is $2 million. Environmental impact studies cost $25,000 to be paid prior to construction begins. Annual costs are estimated to include: Plant operating expenses: $30,000. Environmental remediation expenses: $32,000. As a benefit of the incinerator, a cost reduction of $12 per year is estimated to be on the bill of the company's 35,000 customers. The equipment is estimated to have a lifespan of 10 years, after which the incinerator will be dismantled at a cost of $45,000. Assuming the money is raised at 4% interest, how much is the profit ratio at cost of this project? a. 1.625 b. 1.597 c. 1.634 d. 1.651 e. None of the aboveA municipality plans to build a new roadway that will decrease the amount of time it takes commuters to get from the South end of the city to the North end. The cost to construct the roadway is $13,900,000 It is estimated that the increased efficiency for commuters has a value of $2.11 per car, per day as a result of the decreased operating costs and less time commuting. The new roadway will be adjacent to a large forest. As a result, there is an expectation that there will be an increase of 12 chipmunk-car collisions each year at an estimated cost of $19,528 per collision. The new roadway will have maintenance requirements that will cost $260,800 per year. The life of the new roadway is 45 years and the discount rate is 5.00% What is the minimum average number of cars per day that must use the new roadway in order for the project to be worthwhile?