Capital budgeting criteria: ethical considerations A mining company is considering a new project.

Capital budgeting criteria: ethical considerations

A mining company is considering a new project. Because the mine has received a permit, the project would be legal; but it would cause significant harm to a nearby river. The firm could spend an additional \$9.66 million at Year 0 to mitigate the environmental Problem, but it would not be required to do so. Developing the mine (without mitigation) would cost \$57 million, and the expected net cash inflows would be \$19 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be \$20 million. The risk adjusted WACC is 13%.

1. Calculate the NPV and IRR with mitigation. Round your answers to two decimal places. Enter your answer for NPV in millions. For example, an answer of \$10,550,000 should be entered as 10.55. NPV \$ ___ millionIRR ____  %
2. Calculate the NPV and IRR without mitigation. Round your answers to two decimal places. Enter your answer for NPV in millions. For example, an answer of \$10,550,000 should be entered as 10.55.
3.  NPV \$   ____ million
4. IRR ___ %

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