Question
Assume that to comply with the Environmental Management Regulation enacted by Parliament through the initiatives of the NEMC a company must install three smoke stack
Assume that to comply with the Environmental Management Regulation enacted by Parliament through the initiatives of the NEMC a company must install three smoke stack scrubber units to its ventilation stacks at an installed cost of Tshs 355 million per unit. An estimated Tshs 100 million per unit in fines could be saved each year over the five-year life of the ventilation stacks. The cost of capital is 14% for the firm. The analysis of the investment results in a NPV of Tshs 35.076 million. Could investment in a healthier working environment result in lower long-term costs in the form of lower future health costs? If so, might this decision result in an increase in shareholder wealth? Discuss.
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