Calculate the NPV and IRR without mitigation

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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 $10.66 million at Year 0 to mitigate the environmental Problem, but it would not be required to do so. Developing the mine (without mitigation) would cost $66 million, and the expected net cash inflows would be $22 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $23 million. The risk adjusted WACC is 12%.

Calculate the NPV and IRR with mitigation.

Calculate the NPV and IRR without mitigation.

Reference no: EM13937278

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