Expansion versus replacement cash flowsTesla Systems has estimated the cash flows over the 5-year lives for two projects, A and B. These cash flows are summarized in the following table.

	Project A	Project B
Initial investment	$4,645,000	$1,549,000*
Year	Operating cash flows
1	$559,000	$372,000
2	934,000	372,000
3	1,340,000	372,000
4	2,223,000	372,000
5	3,402,000	372,000

*After-tax cash inflow expected from liquidation.

a. If Project A, which requires an initial investment of $4,645,000, is a replacement for Project B and the $1,549,000 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.