Look at the annual after-tax operating cash flows of two computer systems S and L below:

Year	0 (cost of system)	1 Net cash flow	2 Net cash flow	3 Net cash flow
S	-100	60	90	0
L	-140	80	70	60

As shown, the expected lives of system S and L are 2 years and 3 years: respectively. The system are mutually exclusive (i.e. only will be selected) and both will be replaces repeatedly when the system wears out.

WACC=10%

1. Compute the NPV of the two project?

2. Comment of the risk associated with each project.