Sean Potter owns and operates a regional chain of motels in the Guelph area and is looking to expand into Fergus. He is currently in discussion with two people about buying each of their motels. After reviewing historical financial records, Sean has come up with the following estimates of cash flows for each of these operations: Schlafen Gut Motel Yearly after-tax cash inflow Probability $ 100,000 20 % 110,000 20 % 140,000 20 % 170.000 20 % 180,000 20 % Bien Dormir Motel Yearly after-tax cash inflow Probability $ 115,000 20 120,000 30 140,000 40 150 000 10 Mr.Potter is looking at a 20-year time horizon and will use this time period for decision-making purposes. Either motel can be acquired for $1.200.000. Mr.Potter uses a risk-adjusted discount rate when considering investments. His scale is related to the coefficient of variation. 170.000 180.000 20 20 150 000 10 Mr.Potter is looking at a 20-year time horizon and will use this time period for decision-making purposes. Either motel can be acquired for $1.200.000. Mr.Potter uses a risk-adjusted discount rate when considering investments. His scale is related to the coefficient of variation. Coefficient of variation 0 - 0.20 0.21 -0.30 0.31 -0.40 Over 0.40 Discount rate 8 12 % 15 Not considered % A. Compute the risk-adjusted net present value for each motel: NPV Motel Schlafen Gut Bien Dormir B. Which investment should Mr. Johnson accept if the two investments are matually exclusive? Write your answer in the following space (add space by hitting the enter key... then move on to the next question. C. Should Mr. Potter accept both investments if there was no capital rationing? Bien Dormir B. Which investment should Mr. Johnson accept if the two investments are mutually exclusive? Write your answer in the following space (add space by hitting the enter key then move on to the next question. I C. Should Mr. Potter accept both investments if there was no capital rationing? Write your answer in the following space BOTTOM OF THE ANSWER BOX (There are no questions below this sentence.)