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 $9.33 milion at Year 0 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 554million, and the expected cash inflows would be $18 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $19 million. The risk-adjusted WACC is 15%. a. Calculate the NpV and 1RR with mibgation. Enter your answer for NPV in millions. For example, an answer of 510,550,000 should be entered as 10.55. Do not round intermediate calculations. found your answers to two decimal places. Calculate the NpV and IRR without mitigabon. Enter your answer for NpY in millons. 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: 5 milion 1r9: b. How should the environmental elfects be dealt with when this project is evaluated? 4. The envionmental effects if not mingated could result in additional loss of cash fiows and/or fines and penaltess due to ill will among customers, community, etc. Therefore, even though the mine is legal without mitigation, the company needs to make sure that they have anticipated all costs in the "no mitigation" analysis from 11. The environmental effects should be ignered since the mine is legal without mitigation. 1i1. The ervironmental effects should be treated as a sunk cost and therefore ignored. IV. The emvironervental effects it not mutigated would result in additional cash flows. Therefore, since the mine is legal without mitigation, there are no benefits to performing a "no mitbation" analysis. v. The ervironmental effects should be treated as a remote possibility and should only be convidered at the time in which they actually occur. If so, should the firm do the mitigation? 1. Under the assumption that all costs have been considered, the company would not mitigate for the environmental impoct of the project since its IRR without mitigation is greoter than its IRR when mitagation costs are included in the analysin. I1. Under the assumption that all costs have been considered, the company would mitigate for the environmental impact of the project since its NPY with mitigation is greater than its N5V when mitigabion costs are not included in the analysis. III. Under the assumption that all costs have been considered, the company would not mabgate for the environmental impact of the project unce its NoV without mitigation is greater than its NoV when mivgation costs are included in the analysis. IN. Under the msumption that all corts have been considered, the company would mitigate for the environmental impact of the project since its Ifor with mitigaboin is greater than its Jre when mutigation costs are not induded in the analyus. V. Under the assuimption that all costs have been consifered, the company would not mitigate for the environmantal imipoct of the project since its rev with mitigation is greater than its Fiv when mitigation costs are not induded in the analrus