5 years

Project A Project B Initial investment - $4,653,000 $1,556,000* Year Operating cash flows 1 $570,000 $382.000 2 925,000 382,000 3 1,350,000 382,000 2,227,000 382,000 5 3,400,000 382,000 *After-tax cash inflow expected from liquidation. a. If Project A, which requires an initial investment of - $4,653,000, is a replacement for Project B and the $1,556,000 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 $