If two mutually exclusive projects A and B have different lives, and if the projects can be repeated, then it is necessary to deal explicitly with those unequal lives. Use the replacement chain (common life) approach to deal with the following problem. Suppose American Dental Equipment Corporation is planning to modernize its production facilities, and as part of the process, it is considering either installing a conveyor system (Project A) or using forklift trucks (Project B) to move materials from the parts department to the main assembly line. The following exhibit shows the expected net cash flows. Please calculate the NPVs for these two mutually exclusive alternatives if the firm's corporate cost of capital is 10%. Based on your analysis, which project is more profitable (without using replacement chain approach)? Because two projects have unequal lives, apply the replacement chain (common life) approach to compare these two projects. Which project is more profitable (15 points)? (NPV and IRR, MIRR for both Projects)

Corporate cost of capital: 10%

Year Project A Project B 0 ($40,000) ($20,000) 1 $8,000 $7,000 2 $14,000 $13,000 3 $13,000 $12,000 4 $12,000 5 $11,000 6 $10,000

With excel formulas please?