$2)$ Capital budgeting criteria: Ethical considerations. A mining company is considering a new

project. Because the mine has received a permit, the project would be legal, but it would cause

significant harm to a nearby river. The firm could spend an additional $$10$ million at Year $0$ to

mitigate the environmental problem, but it would not be required to do so$.$ Developing the mine

without mitigation would cause $$60$ million at Year $0,$ and the expected cash inflows would be

$$20$ million per year for $5$ years, starting from Year $1.$ If the firm does invest in mitigation, the

annual inflows would be $$21$ million. The risk$-$adjusted WACC is $12\%.$

a$)$ Calculate the NPV and IRR with and without mitigation.

b$)$ How should the environmental effects be dealt with when this project is evaluated?

c$)$ Should this project be undertaken? If so$,$ should the firm do the mitigation?