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An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the phoenix area, where it
An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the phoenix area, where it is badly needed. Because the firm has received a permit, the plant would be legal: but it would cause some air pollution. The company could spend an additional $40 million at year 0 to mitigation the environmental problem, but it would not be required to do so. The plant without mitigation would cost $210.17 million, and the expected cash inflows would be $70 million per year for 5 year for 5 years. If the firm does invest in mitigation, the annual inflows would be $75.41 million. Unemployment in the area where the plant would be built is high, and the plant would provide about 350 good jobs. The adjusted WACC is 16%. A. Calculate the NPV and IRR with mitigation. Round your answers to two decimal places. Enter your answer for NPV in millions. Do not round your intermediate calculations. Fox example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign. Calculate the NPV and JRR without mitigation. Round your answers to two decimal places. Enter your answer for NPV in millions. Do not round your intermediate calculations. For example, an answer of $10,550,000 should be entered as 10.55
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