K in an unrelated analysis you have the opportunity

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k.In an unrelated analysis, you have the opportunity to choose between thefollowing two mutually exclusive projects:Expected Net Cash FlowsYear Project SProject L0 ($100,000) ($100,000)1 60,000 33,5002 60,000 33,5003 -- 33,5004 -- 33,500The projects provide a necessary service, so whichever one is selected is expectedto be repeated into the foreseeable future. Both projects have a 10 percent costof capital.k.1.What is each project's initial npv without replication?
Mini Case: 10
k.2.Now apply the replacement chain approach to determine the projects’ extendedNPVs. Which project should be chosen?
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k.3.Now assume that the cost to replicate project S in 2 years will increase to$105,000 because of inflationary pressures. How should the analysis behandled now, and which project should be chosen?
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Mini Case:10 - 18
k.

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