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

Year 0 1 2 3 4 CFS -$950 $600 $700 CFL -$2,100 $600 $800 $900 $700 WACC: 11%

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