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What are the project npv and irr

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After discovering a new gold vein in the Colorado Mountains, CTC Mining Corp must decide whether to go ahead and develop the deposit. The most cost-effective method of mining gold is sulfuric acid extraction, a process that could result in environmental damage. Before proceeding with the extraction, CTC must spend $1,200,000 for new mining equipment and pay $200,000 for its installation. The gold mined will net the firm an estimated $375,000 each year for the 5-year life of the vein. CTC's cost of capital is 12%. For the purposes of this problem, assume that the cash inflows occur at the end of the year.

  • What are the project's NPV and IRR?
  • Should this project be undertaken if environmental impacts were not a consideration?
  • How should environmental effects be considered, or any other, project?

Reference no: EM132589263

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