1)  Yani has $12,000 for investment purposes. His bank has offered the following three choices:

Choice 1. A special savings certificate that will pay $190 each month for 5 years and a lump sum payment at the end of 5 years of $13,000

Choice 2. Buy a share of a racehorse for $12,000 that will be worth $26,500 in 5 years

Choice 3. Put the money in a savings account that will have an interest rate of 12% per year compounded monthly

Use an annual worth analysis to make a recommendation to Yani. What is the annual worth of each choice? (Choice 1 Certificate, Choice 2 Racehorse, and Choice 3 Savings Account)

2)  Value Lodges owns an economy motel chain and is considering building a new 200-unit motel. The cost to build the motel is estimated at $740,000; Value Lodges estimates furnishings for the motel will cost an additional $380,000 and will require replacement every 5 years. Annual operating and maintenance costs for the motel are estimated to be $200,000. The average rental rate for a unit is anticipated to be $35/day. Value Lodges expects the motel to have a life of 15 years and a salvage value of $900,000 at the end of 15 years. This estimated salvage value assumes that the furnishings are not new. Furnishings have no salvage value at the end of each 5-year replacement interval.

Assuming average daily occupancy percentages of 50%, 60%, 70%, and 80% for years 1 through 4, respectively, and 90% for the 5th through 15th years, a MARR of 12%/year, 365 operating days/year, and ignoring the cost of land, should the motel be built?

Base your decision on an annual worth analysis. AW = $_______ (in thousands)

Note: Represent all dollar amounts in thousands (in k$), for example for $380,000 use 380 and provide answer in the same format.