A BoxerLoi33 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...

A BoxerLoi33 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 additional 10 million at Year 0 but legally it is not compulsory for it to do so. Undertaking this project would cost $60 million without mitigation. If the firm does invest in mitigation, the annual cash inflows would be $22 million.
The risk adjusted WACC is 12%.

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

      2.Using Picture formula can the project be undertaken? If so, should the firm do mitigation?