Question: Please answer the following. If correct, I will make sure to thumbs up. Thank you! 15. The replacement chain approach - Evaluating projects with unequal
Please answer the following. If correct, I will make sure to thumbs up. Thank you!
15. The replacement chain approach - Evaluating projects with unequal lives Aa Aa 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 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 Tasty Tuna Corporation's CFO plans to use the replacement chain approach to analyze both projects. The expected cash flows for both projects follow If Tasty Tuna Corporation 's cost of capital is 11%, what is the NPV of the Project: German -$800,000 $380,000 $400,000 $420,000 $375,000 $110,000 $85,000 Year 0: Year 1: Year 2: Year 3 Year 4: Year 5 Year 6 Project:Thai Year 0: -$475,000 Year1: $225,000 Year 2: $235,000 Year 3: $255,000 German project? O $425,472 O $452,064 $505,248 $531,840 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 11%, what is the NPV of the Thai project, using the replacement chain approach? O $208,818 O $181,581 O $190,660 $172,502
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