Npv 570 million and irr 1524 b how should the

This preview shows page 2 - 4 out of 4 pages.

NPV = $5.70 million and IRR = 15.24%.
b. How should the environmental effects be dealt with when this project is evaluated?
c.Should this project be undertaken? If so, should the firm do the mitigation?
11-9 CAPITAL BUDGETING CRITERIA: ETHICAL CONSIDERATIONS An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it is badly needed. Because the firm has received a permit, the plant would be legal; but it would cause some air pollution. The company could spend an additional $40 million at Year 0 to mitigate the environmental problem, but it would not be required to do so. The plant without mitigation would cost $240 million, and the expected cash inflows would be $80 million per year for 5 years. If the firm does invest inmitigation, the annual inflows would

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture