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Question 3: VRChamps produces cutting edge virtual reality sets. The firm is considering two projects, A and B. Project B has a higher NPV and
Question 3: VRChamps produces cutting edge virtual reality sets. The firm is considering two projects, A and B. Project B has a higher NPV and a shorter payback period, based on an analysis of the cash outflows and inflows only. However, some toxic Project B waste materials are produced in Project B. In comparison, Project A does not produce any toxic waste products. The management has been informed that the toxic waste materials produced in Project B can be treated so that it becomes safe, and the non-toxic treated waste would can be discharged safely into the environment. The firm will incur additional expenditures to treat this waste. Required: Discuss whether VRChamps should choose Project A or B. Your discussion must include any additional information that would be needed to make an informed decision. (4 marks)
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