NPV and IRR Analysis

After discovering a new gold vein in the Colorado mountains, CTC Mining Corporation must decide whether to go ahead and develop the deposit. The most cost$-$effective method of mining gold is sulfuric acid extraction, a process that could result in environmental damage. Before proceeding with the extraction, CTC must spend $$900,000$ for new mining equipment and pay $$165,000$ for its installation. The mined gold will net the firm an estimated $$350,000$ each year for the $5-$year life of the vein. CTC$\text{'}$s cost of capital is $16\%.$ For the purposes of this problem, assume that the cash inflows occur at the end of the year.

What is the project's NPV$?$ Do not round intermediate calculations. Round your answer to the nearest dollar. Use a minus sign to enter negative value, if any.

$

What is the project's IRR? Do not round intermediate calculations. Round your answer to two decimal places.

$\%$

Should this project be undertaken if environmental impacts were not a consideration?

$-$Select$-$

How should environmental effects be considered when evaluating this, or any other, project?

I. Environmental effects should be treated as sunk costs.

II$.$ Environmental effects could be added by estimating penalties or any other cash outflows that might be imposed on the firm to help return the land to its previous state $($if possible$).$

III. Environmental effects should be ignored since they would have no effect on the project's profitability.