Urgent please Edison Systems has estimated the cash flows over the5-year lives for two projects, A and B. These cashflows are summarized in the table below.a. If project A were actually a replacement for projectB and if the $12,000 initial investment shown forproject B were the after-tax cash inflow expectedfrom liquidating it, what would be the relevant cashflows for this replacement decision?b. How can an expansion decision such as project Abe viewed as a special form of a replacementdecision?Explain.Project AProject BInitial investmentS40,000S12,000YearOpcrating cash inflows$10,000$ 6,0006,0006,00012,00014,000416,0006,00010,0006,000"After-tax cash inflow expected from liquidation.123 +5

Initial investment for Project A = $40,000 Initial investment for Project B = $12000

Edison Systems has estimated the cash flows over the 5-year lives for two projects, A and B. These cash flows are summarized in the table below. a. If project A were actually a replacement for project B and if the $12,000 initial investment shown for proiect R were the after-tax cash inflo w expected

Edison Systems has estimated the cash flows over the 5-year lives for two projects, A and B. These cash flows are summarized in the table below. a. If project A were actually a replacement for project B and if the $12,000 initial investment shown for proiect R were the after-tax cash inflo w expected

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 2STP

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Finance Question
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