Dorati Inc Assume in Two Years Project S Will Still Cost $70,000

Dorati Inc. is considering two mutually exclusive projects. Dorati used a 15% required rate of return to evaluate capital expenditure projects. Assuming the two projects have the costs and cash flows shown below, determine the NPV for each using a replacement chain. $\begin{array}{lrr}\text { Year } & \text { Project S } & \text { Project T } \\0 & -\$ 70,000 & -\$ 100,000 \\1 & \$ 50,000 & \$ 60,000 \\2 & \$ 60,000 & \$ 70,000\\3 && \$ 80,000 \\4 && \$ 90,000\end{array}$ Assume in two years Project S will still cost $70,000 and produce the same two years of cash flows.

A) NPV_s = $8,860: NPV_T = $109,240
B) NPV_s = $14,690: NPV_T = $109,240
C) NPV_s = $40,020: NPV_T = $109,240
D) None of these are correct