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R 2 Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows: Acres Windy Yearly Aftertax Cash Inflow 110,000 115,000 130,000 145,000 150,000 Probability 2.2 0.2 0.2 0.2 0.2 Hillcrest Apartments Yearly Aftertax Cash Inflow 115,000 120,000 130,000 140,000 Probability 8.2 0.3 0.4 2.1 Mr. Backster is likely to hold the apartment complex of his choice for about 30 years and will use this period for decision-making purposes. Elther apartment can be purchased for $110,000. Mr. Backster uses a risk-adjusted discount rate approach when evaluating Investments. His scale is related to the coefficient of variation (for other types of investments, he also considers other measures). Coefficient of Variation Discount Rate e-0.35 0.35-0.40 (cost of capital) 0.40-8.50 not considered 75 10 14 Over 8.50 a. Compute the risk-adjusted net present value for Windy Acres and Hillcrest Apartments. (Round "PV Factor" to 3 decimal places. Enter the answers in thousands of dollars. Do not round intermediate calculations. Round the final answers to nearest whole dollar) Windy Acres Hillcrest Apartments Net present value $ 1583.175 O $ 1613175 b-1. Which investment should Mr. Backster accept if the two investments are mutually exclusive?