Corporate FInace Assignment/ Professional Essay Writers
May 14th, 2020
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 $23 million at Year O to mitigate the environmental problem, but it would not be required to do so. Developing the mine (without mitigation) would cost $93 million, and the expected cash inflows would be $43 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $40 million. The risk-adjusted WACC is 13.60%.
a. Calculate the NPV without mitigation.
b. Calculate the NPV with mitigation.
a)$22.65m; b)$33.05m. Get Finance Help Today