In 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 bodiy needed, Because the firm has eceived a permit, the plant would be legal; but it would cause some air pollution. The company could spend an additional 540million at Year 0 to mitigate the environmental roblem, but it would not be required to do so. The plant without mibgation would require an initial outlay of $209.80 million, and the expected cash infiows would be $70 million ear for 5 years. If the firm does invest in mitigation, the annual inflows would be $75.55 million. Unemployment in the area where the plant would be built is high, and the plant vould provide about 350 good jobs. The risk adjusted WACC is 17%. a. Calculate the 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 values, any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal places. NFV: s million IRR: \% Calculate the NPV and IRR without mitigation, Enter your answer for NPV in millons. 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. NPV: 5 million NPV: 5 million TRR: \%. b. How should the environmental effects be dealt with when evaluating this project? 1. The environmental effects should be ignored since the plant is legal without migation. 11. The environmental effects should be treated as a sunk cost and therefore ignored. III. If the utaity mitigates for the environmental effects, the project is not scceptabie. However, before the company chooses to do the project without mitgation, it needs to make sure that any costs of "ill will for not mitigating for the emvionmental effects have been considered in the original analysis. IV. The environmental effects should be treated as a remote possibaty and should only be considered at the time in which they actually occut. v. The environmental effects if not mitigated would resut in additional cash flows. Therefore, since the plant is legal without mitigation, there are no benefits to performing a "no mitigation" analysis. C. Should this project be undertaken? 1. The project should be undertaken only under the "mitigation" assumption. II. The project should be undertaken since the IRR is positive under both the "mitigation" and "no mitigation" assumptions. III. The project should be undertaken since the NPV is positive under both the "m tigation" and "no mitigstion" assumptions. IV. Even when no mitigation is considered the project has a negative NPV, so it should not be undertaken. V. The project should be undertaken only if they do not mitigate for the environmental effects. However, they have to make sure that they've done the anaivsis properly to avoid any "ili wir" and additional "costs" that might result from undertaking the project without concern for the environenentai impacts