ctric 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 firn be $70 million per year for 5 years. If the firm does invest in mith be $70 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $75,38 miltion. Unemployment in the area where the plant woun is high, and the plant would provide about 350 good jobs. The risk adjusted WACC is 19%. a. Calculate the NPY and IRR with mitigation. Enter your answer for NPV in mitikns, For example, an answer of $10,550,000 should be entered as 10,55 . Negative values, if any, should be indicated by a minus sign, Do not round intermediate calculations. Round your answers to two decimal places, Calculate the NPV and IRR without mitisation. Enter your answer for NPV in milions. Far example, an answer of $20,550,000 should be entered as 10.55. Negative 1. The environmental effects it not mitigated would refut in additional cash fows. Therefore, since the plant is legal without mitgation, there are no benefici to perferming a "no mitigation" analvess. 11. The ervitonmental effects should be ignared since the plant is legal without mitigation. 111. The enviranmiental effects shosid be treated as a whic cost and therefore ignored. W. If the utility mitgates for the emivenmental effects, the project is not accoptable. Howevec bofore the company chooses to do the project without V. The efivironmental effects should be treated as a remote posaibility and should only be considered at the time in which they actuany occur: 'c. Should this project be undertaker? 1. Lren when no migigetion it consisered the project has a negueve NPV, so it shovid not be undertatert: 14. The prejec should be undertakes only if they de not mitigate for the envisentiental effects. However, they have to make sure that ther ke done the 111. The orofict thould be undertaken oniy under the "midgation" sstumption. cric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it elved a permit, the plant would be legal; but it would cause some air pollution. The company could spend an additional $40 millio imental problem, but it would not be required to do so. The plant without mitigation would require an initial outlay of $210.08 mill be $70 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $75.38 million. Unemploymer It is high, and the plant would provide about 350 good jobs. The risk adjusted WACC is 19%. a. Calculate the NPV and IRR with mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 shoul values, If any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal NPV: $ million IRR: Calculate the NPV and IRR without mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 shou values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal pla NPV: $ IRR: b. How should the environmental effects be dealt with when evaluating this project? 1. The environmental effects if not mitigated would result in additional cash flows. Therefore, since the plant is legal without ir to performing a "no mitigation" analysis. II. The environmental effects should be ignored since the plant is legal without mitigation. III. The environmental effects should be treated as a sunk cost and therefore ignored. IV. If the utility mitigates for the environmental effects, the profect is not acceptable. However, before the company chooses to mitigation, it needs to make sure that any costs of "iil will" for not mitigating for the environmental effects have been considi v. The environmental effects should be treated as a remote possibility and should only be considered at the time in which they c. Should this project be undertaken? 1. Even when no mitigation is considered the project has a negative NPV, so it should not be undertaken. II. The project should be undertaken only if they do not mitigate for the environmental effects. However, they have to make sure analysis properly to avold any "ill will and additional "costs" that might result from undertaking the project without concern fo Impacts. III. The project should be undertaken only under the "mitigation" assumption. IV. The project should be undertaken since the IRR is positive under both the "mitigation" and "no mitigation" assumptions. V. The project should be undertaken since the NPV is positive under both the "mitigation" and "no mitigation" assumptions. idering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenlx area, where it is badly needed. Because the firm the plant would be legal; but it would cause some air pollution. The company could spend an additional $40 million at Year 0 to mitigate the but it would not be required to do so. The plant without mitigation would require an initial outlay of $210.08million, and the expected cash inflows year for 5 years. If the firm does invest in mitigation, the annual inflows would be $75.38 million. Unemployment in the area where the plant woulc he plant would provide about 350 good jobs. The risk adjusted WACC is 19%. he NPV and IRR with mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative ny, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal places. 2 the NPV and IRR without mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative f any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal places. thould the environmental effects be dealt with when evaluating this project? 1. The environmental effects if not mligated would result in additional cash flows. Therefore, since the plant is legal without mitigation, there are no benefits to performing a "no mitigation" analysis. II. The environmental effects shouid be ignored since the plant is legal without mitigation. III. The environmental effects should be treated as a sunk cost and therefore ignored. IV. If the utiuty mitigates for the environmental effects, the project is not acceptable. However, before the company chooses to do the project without mitigation, it needs to make sure that any conts of "ili will for not mitigating for the environmental effects have been considered in the original analysis. v. The environmental effects should be treated as a remote possibility and should only be considered at the time in which they actually occur. thould this project be undertaken? 1. Even when no mitigation is considered the project has a negative NPV, so it should not be undertaken. 11. The project should be undertaken oniy if they do not mitigate for the environmental effects. Howevec they have to make sure that they've done the analyals property to avold any "lit will and additional "costs" that might result from undertaking the project without concern for the environmental impicts. iit. The project should be undertaken only under the "mitigation" as wamption. iv. The project showid be undertaken since the ink is positive under both the "mitigation" and "no mitigation" assumptions. v. The project ahouid be undertaken since the Nov is positive under both the "mitigation" and "no mitigation" assumptions