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What are the project npv and irr

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Reference no: EM132729207

Problem - After discovering a new gold vein in the Colorado mountains, CTC Mining Corporation 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 $900,000 for new mining equipment and pay $165,000 for its installation. The mined gold will net the firm an estimated $350,000 each year for the 5-year life of the vein. CTC's cost of capital is 14%. For the purposes of this problem, assume that the cash inflows occur at the end of the year.

Required -

a. What are the project's NPV and IRR?

b. Should this project be undertaken if environmental impacts were not a consideration?

c. How should environmental effects be considered when evaluating this or any other project? How might these concepts affect the decision in part b?

Reference no: EM132729207

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