Projects S and L, cash flows below.

WACC: 7.75%

Year 0 1 2 3 4

CFS $2,000 $1,500 $1,200

CFL $2,000 $800 $800 $800 $800

Answer the following questions: If it's determined to use the project by picking the higher IRR, how much value will be forgone?

Show the calculation please.

Explain the underlying cause of ranking conflicts between NPV and IRR.