Question: ABC Company is considering two mutually exclusive, equally risky projects, S and L with the following cash flows. The cost of capital for both projects

 ABC Company is considering two mutually exclusive, equally risky projects, S

ABC Company is considering two mutually exclusive, equally risky projects, S and L with the following cash flows. The cost of capital for both projects is 12%. Year 0 1 2 3 4 CF for S($) -1,145 550 600 100 113 CF for L($) -2,723 650 725 800 1,431 If the project selection is made based on the IRR rule rather than based on the NPV rule, how much, if any, value will be forgone, i.e., what is the difference in the chosen NPV and the maximum possible NPV? Round your answer to the nearest dollar, but do not include $ sign, e.g., xx. (Hint: Find the discount rate at the crossover point of the two projects' NPV profiles and then draw the two projects' NPV profiles.)

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