15. The replacement chain approach - Evaluating projects with unequal lives Evaluating projects with unequal lives RTE Telecomm is a U.S. firm that wants to expand its business internationally. It is considering potential projects in both Italy and Ukraine, and the Italian 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 RTE Telecomm'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: Year 5: Year 6: Italian $650,000 $220,000 $240,000 $245,000 $270,000 $120,000 $100,000 Project: Year O: Year 1: Year 2: Year 3: Ukrainian $490,000 $250,000 $265,000 $275,000 If RTE Telecomm's cost of capital is 12%, what is the NPV of the Italian project? $212,609 $202,485 $172,112 $182,237 Assuming that the Ukrainian 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 Ukrainian project, using the replacement chain approach? $276,010 $252,009 $240,009 $228,009