b. How should the environmental effects be dealt with when evaluating this project? I. The environmental effects should be ignored since the plant is legal without mitigation. II. The environmental effects should be treated as a sunk cost and therefore ignored. III. If the utility mitigates for the environmental effects, the project is not acceptable. However, before the company chooses to do the project without mitigation, it needs to make sure that any costs of "ill will" for not mitigating for the environmental effects have been considered in the original analysis. IV. The environmental effects should be treated as a remote possibility and should only be considered at the time in which they actually occur. V. The environmental effects if not mitigated would result in additional cash flows. Therefore, since the plant is legal without mitigation, there are no benefits to performing a "no mitigation" analysis. -Select- v c. Should this project be undertaken? I. The project should be undertaken only under the "mitigation" assumption. II. The project should be undertaken since the IRR is positive under both the "mitigation" and "no mitigation" assumptions. III. The project should be undertaken since the NPV is positive under both the "mitigation" and "no mitigation" assumptions. IV. Even when no mitigation is considered the project has a negative NPV, so it should not be undertaken. V. The project should be undertaken only if they do not mitigate for the environmental effects. However, they want to make sure that they've done the analysis properly due to any "ill will" and additional "costs" that might result from undertaking the project without concern for the environmental impacts. -Select- v
b. How should the environmental effects be dealt with when evaluating this project? I. The environmental effects should be ignored since the plant is legal without mitigation. II. The environmental effects should be treated as a sunk cost and therefore ignored. III. If the utility mitigates for the environmental effects, the project is not acceptable. However, before the company chooses to do the project without mitigation, it needs to make sure that any costs of "ill will" for not mitigating for the environmental effects have been considered in the original analysis. IV. The environmental effects should be treated as a remote possibility and should only be considered at the time in which they actually occur. V. The environmental effects if not mitigated would result in additional cash flows. Therefore, since the plant is legal without mitigation, there are no benefits to performing a "no mitigation" analysis. -Select- v c. Should this project be undertaken? I. The project should be undertaken only under the "mitigation" assumption. II. The project should be undertaken since the IRR is positive under both the "mitigation" and "no mitigation" assumptions. III. The project should be undertaken since the NPV is positive under both the "mitigation" and "no mitigation" assumptions. IV. Even when no mitigation is considered the project has a negative NPV, so it should not be undertaken. V. The project should be undertaken only if they do not mitigate for the environmental effects. However, they want to make sure that they've done the analysis properly due to any "ill will" and additional "costs" that might result from undertaking the project without concern for the environmental impacts. -Select- v
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
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Please answer Parts B and C
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