Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
most cost-effective method of mining gold is sulfuric acid extraction, a process that could result in environmental damage. Before prom pertion, CrC must spend $900,000
most cost-effective method of mining gold is sulfuric acid extraction, a process that could result in environmental damage. Before prom pertion, CrC must spend $900,000 for new mining equipment and pay $165,000 for its installation. The mined gold will net the firm an estin. CTC's cost of capital is 17%. For the purposes of this probiem, assume that the cash inflows occur a. What is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest dollar. Use a minus sign to enter neg value. if anv. What is the project's IRR? Do not round intermediate calculations. Round your answer to two decimal places. b. Should this project be undertaken if environmental impacts were not a consideration? c. How should environmental effects be considered when evaluating this, or any other, project? 1. Environmental effects could be added by estimating penalties or any other cash outflows that might be imposed on the firm to help retu the land to its previous state (if possible). II. Environmental effects should be ignored since they would have no effect on the project's profitability. III. Environmental effects should be treated as sunk costs
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started