g$.$ In an unrelated analysis, you can choose between the following two mutually exclusive

projects, Project A $($which lasts for $2$ years$)$ and Project B $($which lasts for $4$ years$)$:

Project A:

Year Group $1$ Group $2$ Group $3$ Group $4$ Group $5$ Group $6$ Group $7$ Group $8$

$0-150,000-250000-300,000-400,000-550000-575000-605000350000$

$185,000160,000195,000260,000357000404,000486,000225,000$

$285,000160,000195,000260,000357000404,000486,000225,000$

Project B:

Year Column$1$ Column$2$ Column$3$ Column$4$ Column$5$ Column$6$ Column$7$ Column$8$

Group $1$ Group $2$ Group $3$ Group $4$ Group $5$ Group $6$ Group $7$ Group $8$

$0-150,000-250,000-300,000-400,000-550,000-575,000-605,000-350,000$

$143,00087,50097,500130,000180,000202,000243,000112,500$

$243,00087,50097,500130,000180,000202,000243,000112,500$

$343,00087,50097,500130,000180,000202,000243,000112,500$

$443,00087,50097,500130,000180,000202,000243,000112,500$

The projects provide a necessary service, so whichever one is selected is expected to be repeated

into the foreseeable future. Both projects have a $10\%$ cost of capital.

$(1)$ What is each project$$s initial NPV without replication?

$(2)$ What is each project$$s equivalent annual annuity?

$(3)$ Apply the replacement chain approach to determine the projects$$ extended NPVs$.$

Which project should be chosen?

$(4)$ Assume that the cost to replicate Project A in $2$ years will increase by $4\%$ due to

inflation. How should the analysis be handled now, and which project should be chosen?