Tasty Tuna Corporation is a U.S. firm that wants to expand its business internationally. It is considering potential projects in both Spain and Mexico, and the Spanish 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 Tasty Tuna Corporations CFO plans to use the replacement chain approach to analyze both projects. The expected cash flows for both projects follow:

Project: Spanish Year 0: $1,120,000 Year 1: $370,000 Year 2: $390,000 Year 3: $420,000 Year 4: $330,000 Year 5: $220,000 Year 6: $95,000

Project: Mexican Year 0: $425,000 Year 1: $175,000 Year 2: $200,000 Year 3: $210,000

If Tasty Tuna Corporations cost of capital is 13%, what is the NPV of the Spanish project? $137,100 $171,375 $162,806 $154,238

Assuming that the Mexican projects 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 13%, what is the NPV of the Mexican project, using the replacement chain approach? $56,952 $59,664 $48,816 $54,240