$12.$ The replacement chain approach $-$ Evaluating projects

with unequal livesEvaluating projects with unequal livesBlue Elk Manufacturing is a U$.$S$.$ firm that wants to expand its

business internationally. It is considering potential projects in

both Germany and Thailand, and the German project is expected to

take six years, whereas the Thai project is expected to take only

three years. However, the firm plans to repeat the Thai project

after three years. These projects are mutually exclusive, so Blue

Elk Manufacturing$$s CFO plans to use the replacement chain approach

to analyze both projects. The expected cash flows for both projects

follow:Project:German$$110,000$Project:Thai$$If Blue Elk Manufacturing$$s cost of capital is $12\%,$ what is the

NPV of the German project?$$224,319$$$190,671$$$235,535$$$201,887$Assuming that the Thai project$$s cost and annual cash inflows do

not change when the project is repeated in three years and that the

cost of capital will remain at $12\%,$ what is the NPV of the Thai

project, using the replacement chain approach?$$68,750$$$65,313$$$79,063$$$72,188$