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Expansion versus replacement cash flowsTesla Systems has estimated the cash flows over the 5-year lives for two projects, A and B. These cash flows are summarized in the following table.(Click on the icon here

in order to copy the contents of the data table below into a spreadsheet.)

	Project A	Project B
Initial investment	$4,648,000	$1,543,000*
Year	Operating cash flows
1	$551,000	$378,000
2	924,000	378,000
3	1,349,000	378,000
4	2,229,000	378,000
5	3,404,000	378,000

*After-tax cash inflow expected from liquidation.

a. If Project A, which requires an initial investment of

$4,648,000,

is a replacement for Project B and the

$1,543,000

initial investment shown for Project B is the after-tax cash inflow expected from liquidating it, what would be the net cash flows for this replacement decision?

b. How can an expansion decision such as project A be viewed as a special form of a replacement decision? Explain.

a. Calculate the relevant cash flows for this replacement decision:(Round to the nearest dollar.)

	Relevant
Year	Cash Flows
0	$
1	$
2	$
3	$
4	$
5	$

cxpansion versus replacement casi lows Tesla Systems has esulateu casti lows over the 5-year lives of two projects, Aan D. These casni lows are summarizeu in the Ollowing ladie. (CHICK Unue icon here loruer lu copy lie contents of the wala lanie below ITILU a spreaustieel.) Project A Project B Initial investment -$4,648,000 $1,543,000* Year Operating cash flows 1 $551,000 $378,000 2 924,000 378,000 3 1,349,000 378,000 4 2,229,000 378,000 5 3,404,000 378,000 *After-tax cash inflow expected from liquidation. a. If Project A, which requires an initial investment of - $4,648,000, is a replacement for Project B and the $1,543,000 initial investment shown for Project B is the after-tax cash inflow expected from liquidating it, what would be the net cash flows for this replacement decision? b. How can an expansion decision such as project A be viewed as a special form of a replacement decision? Explain. a. Calculate the relevant cash flows for this replacement decision: (Round to the nearest dollar.) Relevant Year Cash Flows 0 $ 1 $ 2 $ 3 $ 4. $ 5 $