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Waste Industries is evaluating a $57100 project with the following cash flows. Years 1 2 Cash Flows 9,210 21,400 18,500 25,600 24,300 4 5 The coefficient of variation is 1.223. Discount rate Coefficient of variation 0.00-0.25 0.26-0.50 8.51-0.75 0.76-1.00 1.91-1.25 6% 8 22 19 12 Compute the net present value (NPV). (Negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round the final answer to the nearest whole dollar. Omit the $ sign in the answer.) Net present value Based on the net present value, should the project be undertaken? Ches NO Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows: Probability Windy Acres Yearly Aftertax Cash Inflow $20,000 25,000 40,000 55.000 60.00 Hillcrest Apartments Yearly Aftertax Cash Inflow Probability 525,000 0.2 30,00 . 10,00 0.4 50,000 0.2 0.2 0.2 0.2 a. Find the expected value of the cash flow for each apartment complex (Enter the answers in thousonds.) Expected to low Windy Acres Hillcrest Apartments b. What is the coefficient of variation for each apartment complex? (Do not round intermediate calculations. Round the final answers to 4 decimal places.) Coefficient of vartai Windy Acres Het Apartments c. Which apartment complex has more risk? Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows: Windy Acres Yearly Aftertax Cash Inflow 60,000 65,000 80,000 95,000 100,000 Probability 0.1 0.2 Hillcrest Apartments Yearly Aftertax Cash Inflow 65,000 70,000 30,000 90,000 Probabilety 0.2 0 0.4 0.1 0.2 0.1 Mt Backster is likely to hold the apartment complex of his choice for about 10 years and will use this period for decision-making purposes. Either apartment can be purchased for $160,000. Mr. Backster uses a risk-adjusted discount rate approach when evaluating Investments. His scale is related to the coefficient of variation (for other types of investments, he also considers other measures) Coefficient of Variation -0.35 6.35.000 0.40-0.50 Discottate 10 13 not considered (cost of capital) o. Compute the tisk-adjusted net present value for Windy Acres and Hillcrest Apartments (Round "PV Factor to 3 decimal places. Do not found intermediate calculations. Round the final answers to nearest whole dollar) tesont value Windys a. Compute the risk-adjusted net present value for Windy Acres and Hillcrest Apartments (Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answers to nearest whole dollar.) Windy Acres Hillcrest Apartments Net present value $ $ b-1. Which investment should Mt. Backster accept if the two investments are mutually exclusive? Hillcrest Windy Acres Both None b-2. Which investment should Me Backster accept if the investments are not mutually exclusive and no capital rationing is involved? Windy Acres Hillcrest Apartments Both None

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