A town in Wyoming wants to drill a geo-thermal well to provide district heating steam and hot water for its businesses and residences. After government subsidies, the capital investment for the well is $500,000, and the geothermal well will reduce natural gas consumption for steam and hot water production by $50,000 per year. The salvage value of the well is negligible. The simple payback period for this well is 10 years. If the MARR of the town is 8% per year and the life of the geothermal well is 25 years, what is the IRR for this project? Choose the closest answer below. (a) 6.2% (b) 9.1% (c) 8.8% (d) 10.3%
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