$12-$ Assignment $-$ Cash Flow Estimation and Risk Analysis

$7.$ Unequal project lives

Widget Corp. has to choose between two mutually exclusive projects. If it chooses project $A,$ Widget Corp. will have the opportunity to make a similar investment in three years. However, if it chooses project $B,$ it will not have the opportunity to make a second investment. The following table lists the cash flows for these projects. If the firm uses the replacement chain $($common life$)$ approach, what will be the difference between the net present value $($NPV$)$ of project A and project B$,$ assuming that both projects have a weighted average cost of capital of $10\%?$

Cash Flow

$\backslash$table$[[$Project A$,,$Project B$,],[$Year $0$:$,-$$$10,000,$Year $0$:$,-$$$45,000$