Question: 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
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 $10.33 million at Year 0 to mitigate the environmental Problem, but it would not be required to do so. Developing the mine (without mitigation) would require an initial outlay of $63 million, and the expected cash inflows would be $21 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $22 million. The risk-adjusted WACC is 14%. Calculate the NPV and IRR with mitigation. Enter your answer for NPV in millions. For example, an
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
