From what I understand, THHN run in a dry location is to be sized at 90C and in a wet location at 75C for conductor ampacity calcs unless there are terminals involved in which case it's a little different. Since the question does not specifically say dry or wet, I think you have to use the dry rating of 90C. #1 THHN at 90C is rated 150A. Multiply this by the correction factor of .71, and you end up with 106.5A.
I'm not 100% on this but from what I can gather from the question, I believe 106.5A is the correct answer.