Solution for QID #104175: In less than three decades, China has become the second larg | StudyHelpMe

In less than three decades, China has become the second largest economy in the world. But this rapid growth has led to a lot of environmental and health issues. These developments have placed environmental pollution at the top of the government's reform agenda. Suppose that Sinochem Group, a large conglomerate primarily engaged in production and trading of chemicals, fertilizer, and exploration and production of oil, is considering building a large chemical factory near Huangpu River. The NPV of that project is $20,000,000. This value does not include fines for cleaning the river of the chemical waste from the factory, which might additionally cost at least $3,000,000. On the other hand, the company may invest in a particular filtering solution which reduces pollution to zero, but has a cost of $5,000,000. Which solution would you choose if you were the CEO of the company? Justify your choice.