13. The replacement chain approach - Evaluating projects with unequal lives Evaluating projects with unequal lives Tasty Tuna Corporation is a U.S.firm that wants to expand its business internationally. It is considering potential projects in both France and Mexico, and the French project is expected to take six years, whereas the Mexican project is expected to take only three years. However, the firm plans to repeat the Mexican project after three years. These projects are mutually exclusive, so Tasty Tuna Corporation's CFO plans to use the replacement chain approach to analyze both projects. The expected cash flows for both projects follow: Project: Year 0: Year 1: Year 2: Year 3: Year 4: French -$700,000 $240,000 $270,000 $290,000 $250,000 $130,000 $110,000 Year 51 Year 6: Project Voar 0 Year 1 Mexican - $425,000 $175,000 $200,000 $210,000 Year 2: Year 3: If Tasty Tuna Corporation's cost of capital is 13%, what is the NPV or the French project? If Tasty Tuna Corporation's cost of capital is 13%, what is the NPV of the French project? $191,470 $221,702 $181,392 $201.547 Assuming that the Mexican project's cost and annual cash inflows do not change when the project is repeated in three years in that the cost of capital will remain at 13%, what is the NPV of the Mexican project, using the replacement chain approach? $56,952 $54,240 559,664 $65,088