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:

Windy Acres			Hillcrest Apartments
Yearly Aftertax Cash Inflow	Probability		Yearly Aftertax Cash Inflow	Probability
$90,000	0.2		$95,000	0.2
95,000	0.2		100,000	0.3
110,000	0.2		110,000	0.4
125,000	0.2		120,000	0.1
130,000	0.2

a. Find the expected value of the cash flow for each apartment complex. (Enter the answers in thousands.)

	Expected cash flow
Windy Acres	$ 110000 Numeric ResponseEdit Unavailable. 110000 incorrect.
Hillcrest Apartments	$ 105000 Numeric ResponseEdit Unavailable. 105000 incorrect.

b. What is the coefficient of variation for each apartment complex? (Do not round intermediate calculations. Round the final answers to 4 decimal places.)

	Coefficient of variation
Windy Acres	0.14 Numeric ResponseEdit Unavailable. 0.14 incorrect.
Hillcrest Apartments	0.073 Numeric ResponseEdit Unavailable. 0.073 incorrect.

c. Which apartment complex has more risk?

multiple choice

• Hillcrest Apartments

• Windy Acres