ABC Mining Corporation spent $340,000 searching for a possible mining site. After discovering a new gold vein in the Colorado Mountains, ABC Mining Corporation must decide whether to mine the deposit. The most cost-effective method of mining gold is sulfuric acid extraction, a process that results in environmental damage. To go ahead with the extraction, ABC must spend $900,000 for new mining equipment, pay $365,000 for its installation and sell the old equipment for $20,000. The gold mined will net the firm an estimated $325,000 each year over the 5-year life of the vein. At the end of the mine, the company expects to sell the equipment used in the mine for $325,000. ABEs cost of capital is 14%. For the purposes of this problem, assume that the cash inflows occur at the end of the year.

1. What are the NPV and IRR of this project?
2. Should this project be undertaken, ignoring environmental concerns?
3. How should environmental effects be considered when evaluating this, or any other, project? How might these effects change your decision in part b?