Mr. Sam Golff desires to invest a portion of his assets in rental property. He has narrowed his choices down to two apartment complexes, Palmer Heights and Crenshaw Village. After conferring with the present owners, Mr. Golff has developed the following estimates of the cash flows for these properties.

Palmer Heights
Yearly aftertax cash inflow (in thousands)				Probability
	$ 130				.1
	135				.2
	150				.4
	165				.2
	170				.1

Crenshaw Village
Yearly aftertax cash inflow (in thousands)				Probability
	$ 135				.2
	140				.3
	150				.4
	160				.1

Mr. Golff is likely to hold the complex of his choice for 20 years, and he will use this time period for decision-making purposes. Either apartment complex can be acquired for $150,000. Mr. Golff uses a risk-adjusted discount rate when considering investments. His scale is related to the coefficient of variation.

Coefficient of variation			Discount rate
0		0.20		5	%
0.21		0.40		9		(cost of capital)
0.41		0.60		14
Over 0.60				18

(a)	Compute the risk-adjusted net present values for Palmer Heights and Crenshaw Village. (Omit the "$" sign in your response.)

	Net present value
Palmer Heights	$
Crenshaw Village	$

(b-1)

Which investment should Mr. Golff accept if the two investments are mutually exclusive?

	Crenshaw Village
	Palmer Heights
	Both
	None

(b-2)

Which investment should Mr. Golff accept If the investments are not mutually exclusive and no capital rationing is involved?

	Palmer Heights
	Crenshaw Village
	Both
	None