Evaluating projects with unequal lives

Savory Seafood Inc. is a U$.$S$.$ firm that wants to expand its business internationally. It is considering potential projects in both Italy and Mexico, and

the Italian project is expected to take six years, whereas the Mexican project is expected to take only three years. However, the firm plans to repeat

the Mexican project after three years. These projects are mutually exclusive, so Savory Seafood Inc.$\text{'}$s CFO plans to use the replacement chain

approach to analyze both projects. The expected cash flows for both projects follow:

If Savory Seafood Inc.$\text{'}$s cost of capital is $11\%,$ what is the NPV of the Italian project?

$$247,592$

$$259,972$

$$235,212$

$$210,453$

Assuming that the Mexican 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 Mexican project, using the replacement chain approach?

$$350,950$

$$319,045$

$$366,902$

$$303,093$