William Johnson 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 the following estimates of cash flows for each of these operations: Tee-P-Teep Motel Dodo Motel 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 Mr. Johnson is looking at a 30 year time horizon and will use this time period for decision-making purposes. Either motel can be acquired for $206,000. Mr. Johnson uses a risk-adjusted discount rate when considering investments. His scale is related to the coefficient of variation. Coefficient of Variation Discount Rate 00.35 5% 0.350.40 8 (cost of capital) 0.400.50 12 Over 0.50 not considered a. Compute the risk-adjusted net present value for Tee-P-Teep Motel and Dodo Motel. (Round "PV Factor" to 3 decimal places. Enter the answers in thousands of dollars. Do not round intermediate calculations. Round the final answers to nearest whole dollar.) Net present value Tee-P-Teep Motel $ Dodo Motel $ b-1. Which investment should Mr. Johnson accept if the two investments are mutually exclusive? Dodo Motel Tee-P-Teep Motel Both None b-2. Which investment should Mr. Johnson accept If the investments are not mutually exclusive and no capital rationing is involved? Tee-P-Teep Motel Dodo Motel Both None