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Attempts: Keep the Highesti /7 15. Problem 11.08 (Capital Budgeting Criteria: Ethical Considerations) eBook A mining company is considering a new project. Because the mine has received a permt, the project would be legal; but it would cause significant harm to a nearby river. The firm could spend an additional $9 million at Year to mitigate the environmental Problem, but it would not be required to do so. Developing the mine (without mitigation) would require an initial outlay of $1 million, and the expected cash inflows would be $1 million per year for years. If the firm does invest in mitigation, the annual inflows would be $18 million The risk-adjusted WACC IS 14% Calculate the NPV and BRR with mitigation. Enter your answer for Nov in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round Intermediate calculations. Round your answers to two decimal places. NPVIS million IRR: Calculate the NPV and IRR without mitigation Enter your answer for Np in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round Intermediate calculations, Round your answers to two decimal places NEVIS million TRA w b. How should the environmental effects be dealt with when this project is evaluated? 1. The environmental effects if not mitigated could result in additional loss of cash flows and/or fines and penalties due to will among customers, community, etc. Therefore, even though the mine is legal without mitigation, the company needs to make sure that they have anticipated all costs in the "no mitigation analysis from not doing the environmental mitigation II. The environmental effects should be ignored since the mine is legal without mitigation 1. The environmental effects should be treated as a sunk cost and therefore ignored. 1. The environmental effects not mitigated would result in additional cash flows. Therefore, since the mine in legal without mitigation, there are no benefits to performing a "no mitigation analysis V. The environmental effects should be treated as a remote powbility and should only be considered at the time in which they actually occur. c. Should this project be undertaken? If so, should the fim do the mitigation 1. Under the assumption that all costs have been considered, the company would not mitigate for the environmental impact of the project since its Tre without mitigation is greater than I TRR when mitigation costs are included in the analysis 11. Under the assumption that all costs have been considered, the company would mitigate for the environmental impact of the project since its NPV with mitigation is greater than its NPV when mitigation costs are not included in the analysis III. Under the assumption that all costs have been considered the company would not mitigate for the environmental impact of the project since it without mitigation is greater than its NPV when mitigation costs are included in the analysis IV. Under the assumption that all costs have been considered, the company would mitigate for the environmental impact of the project since its TRX with mitigation is greater than it IRR when mitigation costs are not included in the analysis V. Under the assumption that all costs have been considered the company would not mitigate for the environmental impact of the project since it NPV with mitigation is greater than it NPV when mitigation costs are not included in the shals