William Johnson owns and operates a regional chain of motels in the Niagara Falls area and is looking to expand into St. Catherines. He is currently in discussion with two people about buying each of their motels. After reviewing historical financial records, William has come up with following estimates of cash flows for each of these operations: Tee-P-Teep Motel Yearly after-tax cash inflow Probability $ 120,000 20 % 125,000 20 % 140,000 20 % 155,000 20 % 160.000 20 % Dodo Motel Yearly after-tax cash inflow Probability $ 125,000 20 % 130,000 30 % 140,000 40 % 150,000 10 % [2] Mr.Johnson is looking at a 25-year time horizon and will use this time period for decision-making purposes. Either motel can be acquired for $1,450,000. Mr.Johnson 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: Motel NPV Tee-P-Teep Motel Dodo Motel B. Which investment should Mr. Johnson accept if the two investments are mutually exclusive? C. Should Mr. Johnson accept both investments if there was no capital rationing? I Write your answer in the following space