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 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($) -1,103 550 600 100 126
CF for L($) -2,720 650 725 800 1,404

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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