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 $10 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 $60 million, and the expected net cash inflows would be $20 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $21 million. The risk-adjusted WACC is 12%.

a. Calculate the NPV and IRR with and without mitigation.

b. Should this project be undertaken? If so, should the firm do the mitigation?

Please answer without using financail calculator as i require the full workings of the answers in full detail