PLEASE BE DESCRIPTIVE AND SHOW ALL WORK (INCLUDING FORMULAS).

P11-3 Replacement versus expansion cash flows Tesla Systems has estimated the cash flows over the 5-year lives for two projects, A and B. These cash flows are summa- rized in the table below. Initial investment Year Project A Project B -$4,650,000 $1,550,000 Operating cash inflows $ 560,000 $380,000 925,000 380,000 1,350,000 380,000 2,225,000 380,000 3,400,000 380,000 a. If project A, which requires an initial investment of $4,650,000, is a replacement for project B and the $1,550,000 initial investment shown for project B is the after-tax cash inflow expected from liquidating project B, what would be the net cash flows for this replacement decision? b. Instead, if project A is an expansion decision, what would be the net cash flows and how can it be viewed as a special form of a replacement decision? Explain. P11-3 Replacement versus expansion cash flows Tesla Systems has estimated the cash flows over the 5-year lives for two projects, A and B. These cash flows are summa- rized in the table below. Initial investment Year Project A Project B -$4,650,000 $1,550,000 Operating cash inflows $ 560,000 $380,000 925,000 380,000 1,350,000 380,000 2,225,000 380,000 3,400,000 380,000 a. If project A, which requires an initial investment of $4,650,000, is a replacement for project B and the $1,550,000 initial investment shown for project B is the after-tax cash inflow expected from liquidating project B, what would be the net cash flows for this replacement decision? b. Instead, if project A is an expansion decision, what would be the net cash flows and how can it be viewed as a special form of a replacement decision? Explain