Firm X is able to sell one of its two milling machines now. Both machines perform the same function but differ in age. Machine A could be sold today for $50,000. Its operating costs are 20000 a year, but at the end of five years, the machine will require a $20,000 overhaul. Thereafter, operating costs will $30,000 until the machine is finally sold in year 10 for $7,000. Machine B could be sold today for $25,000. If it is kept, it will need an immediate $20,000 overhaul. Thereafter, operating costs will be $30,000 a year until the machine is finally sold in year 5 for $4,000. Cash flows have been forecasted in real terms. The real cost of capital is 12%. Which machine should firm X sell now

How should the environmental effects be dealt with when evaluating this project? the environmental effects should be ignored since the plant is legal without mitigation. the environmental effects should be treated as a sunk cost and therefore ignored. if the utility mitigates for the environmental effects, the project is not acceptable. however, before the company chooses to do the project without mitigation, it needs to make sure that any costs of "ill will" for not mitigating for the environmental effects have been considered in the original analysis. the environmental effects should be treated as a remote possibility and should only be considered at the time in which they actually occur. the environmental effects if not mitigated would result in additional cash flows. therefore, since the plant is legal without mitigation, there are no benefits to performing a "no mitigation" analysis.