a. Calculate the NPV and IRR with mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places. NPV: $ million IRR: Calculate the NPV and IRR without mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places. NPV: $ million IRR:
a. Calculate the NPV and IRR with mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places. NPV: $ million IRR: Calculate the NPV and IRR without mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places. NPV: $ million IRR:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
100%
![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 o 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 $60 million, and the expected cash inflows would be $20
million per year for 5 years. 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 mitigation. Enter your answer for NPV in millions. For example, an answer
of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers
to two decimal places.
NPV: $
million
IRR:
Calculate the NPV and IRR without mitigation. Enter your answer for NPV in millions. For example, an
answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your
answers to two decimal places.
NPV: $
million
IRR:
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F52466bf7-0af2-4f03-bb5e-0863885427f1%2Fc6fa3567-a66e-4aa4-94ea-4bda40f72601%2Fgu0ryb2_processed.png&w=3840&q=75)
Transcribed Image Text: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 o 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 $60 million, and the expected cash inflows would be $20
million per year for 5 years. 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 mitigation. Enter your answer for NPV in millions. For example, an answer
of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers
to two decimal places.
NPV: $
million
IRR:
Calculate the NPV and IRR without mitigation. Enter your answer for NPV in millions. For example, an
answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your
answers to two decimal places.
NPV: $
million
IRR:
%
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