Question: The replacement chain approach - Evaluating projects with unequal lives Evaluating projects with unequal lives Cold Duck Manufacturing Inc. is a U.S. firm that wants

The replacement chain approach - Evaluating projects with unequal lives

Evaluating projects with unequal lives

Cold Duck Manufacturing Inc. is a U.S. firm that wants to expand its business internationally. It is considering potential projects in both France and Ukraine, and the French project is expected to take six years, whereas the Ukrainian project is expected to take only three years. However, the firm plans to repeat the Ukrainian project after three years. These projects are mutually exclusive, so Cold Duck Manufacturing Inc.'s CFO plans to use the replacement chain approach to analyze both projects. The expected cash flows for both projects follow:

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