Apex Semiconductor Inc. (ASI) is evaluating two proposed projects, S and L. Table 1 provides some simplified data on two projects. Both involve developing a new computer chip, but with different ways of handling the operation. Under plan S, the project would be accelarated; hence it would have high sales in Year 1. However, under S the firm's competitors would learn about the product relatively soon, and sales would decline as competitors began to produce similar chips. Therefore, S's cash flows decline over its 4-year life. Under Project L, things would be handled differently Here, PNC would operate slowly, carefully, and securely, and customers would be locked in through long-term contracts. Thus under L, sales and cash flows would rise over time. Even so, new products would eventually replace this chip, so L would also have a 4-year life. Financial analysts have estimated ASI's weighted cost of capital (WACC) to be 8.71% Table 1. Cash Flows for Projects S and L Project S Year (t) 0 1 4 Net cash flow $100,000) $82,270 $30,000 $10,000 $10,000 Project L Year (t) 0 1 4 Net cash flow ($100,000) $10,000 $20,000 $50,000 $75,750