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 $3,025 and save the school $580 annually for 10 years. the school’s hurdle rate is 8 percent.

Year      Cashflow     [email protected]%       PV

                  $                                   $

0            (3,025)            1             (3,025)

1-10          580            6.7101        3,892

                                      NPV       867

The school's governing board is advised to embark on the project because it has a positive NPV of $867.

Explanation:

In this case, we need to determine the present value of annual savings by multiplying the annual savings by the present value of annuity factor at 8% for 10 years. The initial outlay is deducted from the present value of annual savings in order to obtain the NPV of the project.

a recipe serves 8 people, and calls for 5 lbs of apples and 2 cups of flour. you want to prepare it for 24 people. divide 24 by 8 to get 3, and then multiply your ingredients by 3.

so for 24 people, you'll need 15 lbs of apples, and 6 cups of flour.

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