Ch 11-End-of-Chapter Problems-The Basics of Capital Budgeting

II. The environmental effects should be ignored since the mine e legal thout mitigation

III. The environmental effects should be treated as a sunk cost and therefore ignored

IV. The environmental effects if not mitigated would result in additional cash flows. Therefore, since the mine is legal without mitigation, there are no benefits to performing a "ne

mitigation analysis.

V. The environmental affects should be treated as a remote possibility and should only be considered at the time in which they actually occur

c. Should this project be undertaken?

Galed

Gebed

1. The environmental affects if not mitigated could rest in additional loss of cash flows and/or fines and penalties due to ill will among customers, community, etc. Therefore,

even though the mine is legal without mitigation, the company needs to make sure that they have soticipated all costs in the "no mitigation analysis from not doing the

environmental mitigation.

The project should not be undertaken under the

The project should be undertakan only under the

The project should not be undertaken ander the "mitigate

Even when mitigation is considered the project has a

Even when mitigation is considered the project

mitigation assumption

man

would not mitigate for the environmental impact of the project since its IRR without mitigation is

any would mitigate for the environmental impact of the project since its NPV with mitigation is greater

III. Under the assumption that all costs have been considered, the company would not mitigate for the environmental impact of the project since its NPV without mitigation is

greater than its NPV when mitigation costs are included in the analys

-Select

should be unde

1. Under the assumption that all costs

onsidered, the

than its NPV when mitigation costs are not included in the analysis

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IV. Under the assumption that all costs have been considered, the company would mitigate for the environmental impact of the project since its IRR with mitigation is greater

than its IRR when mitigation costs are not included in the analysis

V. Under the assumption that all costs have been considered, the company would not mitigate for the environmental impact of the project since its NPV with mitigation is greater

than its NPV when mitigation costs are not included in the analys

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