IRR:

$\%$

Calculate 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 $10\mathrm{.}55.$ Do not round intermediate calculations. Round your answers to two decimal

places.

NPV: $

million

IRR:

$\%$

b$.$ How should the environmental effects be dealt with when this project is evaluated?

I. The environmental effects if not mitigated could result in additional loss of cash flows and$/$or fines and penalties due

to ill 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.

III. The environmental effects should be treated as a sunk cost and therefore ignored.

IV$.$ The environmental effects if not mitigated would result in additional cash flows. Therefore, since the mine is legal

without mitigation, there are no benefits to performing a $"$no mitigation" 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.

c$.$ Should this project be undertaken?

$-$Select$-$

If so$,$ should the firm do the mitigation?

I. Under the assumption that all costs have been considered, the company would not mitigate for the environmental

impact of the project since its IRR without mitigation is greater than its IRR when mitigation costs are included in the

analysis.

II$.$ 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 its NPV 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 IRR with mitigation is greater than its 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 its NPV with mitigation is greater than its NPV when mitigation costs are not included in

the analysis.