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[Problem deals with comparing NPV's of investment projects with unequal lives. The managers of Palm Lumber, Inc. want to produce wooden shelving. The firm anticipates

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[Problem deals with comparing NPV's of investment projects with unequal lives. The managers of Palm Lumber, Inc. want to produce wooden shelving. The firm anticipates strong demand for home products over the next 12 years, and it can meet that demand with either of two methods (projects), supported by different types of manufacturing equipment. The two projects would be equally risky, such that the annual weighted average cost of capital (WACC) for either project would be 8.2%. Project A has a 12-year expected life and Net Present Value of $9,600,000. Project B has a 6-year expected life and an NPV of $5,800,000. Because demand should continue throughoqt the next 12 years, Project B, if chosen, would be repeated once (over years 7 to 12). It is assumed that the NPV for a repetition of Project B would also be $5,800,000 at the future date when it is repeated (efficiency gains should offset any Inflationary effects). Based on the replacement chain method of analysis, what are the two relevant total NPV figures to compare? A. $9,600,000.00 for Project A and $11,600,000.00 for Project B B. $13,328,585.48 for Project A and $9,414,634.83 for Project B C. $5,193,600.00 for Project A and 55,800,000.00 for Project B D. 59,600,000.00 for Project A and 59,414,634.83 for Project B E. $13,328,585.48 for Project A and $8,052,687.06 for Project B

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