1) Our recommendations:

We can suppose that the damages caused during the absence of James have been done by
its employees thus James should increase the wages of its 2 employees because they are not
paid enough for all their work: 16 000 euros is not sufficient; it is just the minimal wage
authorized. James should ensure the loyalty of his employees who are at the heart of
creating value in the company. The consideration of their interests must extend from their
fair salary, to participation in the company’s results.
Employees must also be part of corporate governance; James should give them more
responsibilities in order to imply his employees in the well-being of the company.
Good management of human resources while respecting decent working conditions, creates
more motivation and therefore more motivation for employees who are more involved and
increase the productivity of the company.
According to Henry Ford and the “trusteeship” management, James should improve living
conditions of his employees by raising wages and setting up a special healthcare system for
employees for instance.

2) First, we have to calculate the Net present value (NPV):

NPV = - 800 000 + 200 000/(1,1)^1 + 200 000/(1,1)^2 + 200 000/(1,1)^3 + 200 000/(1,1)^4 +

200 000/(1,1)^5
NPV = - 41 842, 65 euros

Then, we have to calculate the cost of additional tones of CO2 per year and for 5 years:

2500 x 150 = 375 000 euros  cost of additional tones of CO2 per year
375 000 x 5 = 1 875 000 euros  cost of additional tones of CO2 for 5 years

To finish we need to subtract the cost of the additional tones of CO2 for 5 years to the NPV:

-41 842, 65 – 1 875 000 = - 1 916 842, 65

Therefore, the project of the cousin is not feasible because the NPV is inferior to 0 by taking
into account the negative externalities.