Problem 4 (10 points): Prof. Bryan Stikeleather is looking to get into the bed and breakfast biz, and since he doesn't know much about cost or managerial accounting he turns to you for advice. He has two options he would like you to consider. Option 1: He can purchase a set of ski chalets in Denver at a cost of $500,000 today. He anticipates that he can generate $200,000 in rent revenue each year with this option, and expenses to keep the chalets operational would be $75,000 per year. He plans to run the business for five years, after which he will sell the chalets and retire to Albuquerque, NM. He anticipates that the chalets will be worth $750,000 at the end of the five years. Option 2: He can purchase a mobile home lot in Dothan, AL and rent them out to vacationers. He can purchase the lot for $300,000 today. He estimates that he can earn $175,000 per year with this option, and expenses to keep the lot operational would be $25,000 per year. The mobile homes will need refurbishing at the end of the third year, which would be a one-time cost of $50,000. He also plans to run this business for five years, after which he will pick the best mobile home to live and sell the remainder for an estimated $450,000. Since he does not have good credit, it would cost him 10% to fund either of these operations. Required: Calculate the net present value for each option and help Prof. Stikeleather decide which is the better option for him (5 points each).