After discovering a new gold vein in Carletonville, Anglo 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 extraction, Anglo must spend R $13500000$ for new mining equipment and pay R $2475000$ for its installation.

The gold mine will net the firm an estimated R $5250000$ each year over the five$-$year life of the vein. Anglo's cost of capital is $14\%.$ For the purpose of this problem, assume that the cash inflows occur at the end of the year.

Required:

What is the NPV of the project? $(15$ Marks$)$

How should environmental effects be considered when evaluating such projects? $(5$ Marks$)$

$($Present values @$14\%$ of $1$ rand for $5$ years are: $0\mathrm{.}8772$; $0\mathrm{.}7695$; $0\mathrm{.}675$; $0\mathrm{.}5921$ and $0\mathrm{.}5194)$