Question: Farmer Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and repeatable. Year CFs

Farmer Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and repeatable. Year CFs CFL WACC: 11% 3. 1 -$950 $600 $700 -$2,100 $600 $800 $900 $700 One suggestion is to use the replacement chain to make the two projects equal in life by repeating Project S at end of the 2nd year. If this method is used, which project is to provide a higher NPV in the four-year term? Show the calculations

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