company is deciding to undertake a project. The project is quite profitable as it will generate net cash inflows of $20 million per year for 5 years. However, it will cause pollution to the nearby residents. The company can mitigate this pollution by investing an additional 10 million at Year 0 but legally it is not compulsory for it to do
company is deciding to undertake a project. The project is quite profitable as it will generate net cash inflows of $20 million per year for 5 years. However, it will cause pollution to the nearby residents. The company can mitigate this pollution by investing an additional 10 million at Year 0 but legally it is not compulsory for it to do
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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Question
A construction company is deciding to undertake a project. The project is quite profitable as it will generate net
a) Calculate the NPV and IRR with and without mitigation.
b) Should the project be undertaken? If so, should the firm do mitigation?
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