Avenge of Return to Net Present Value Method, and Analysis for a service company The capital investment committee of Arches Landscaping Company is considering the capital investments. The estimated preting income and net cafows from each investments for Front-End Loader Greenhouse Operating Net Cash Operating Net Cash Year Income Flow Income Plow 1 $50,400 $164,000 $100,000 5263,000 2 50,400 164,000 01,000 221,000 3 50,400 164,000 40,000 150,000 50,400 114,000 10,000 107.000 50.400 164,000 7,000 74.000 5252,000 $820,000 1252.000 5520,000 Total Each project requires an investment of $400,000. Straight-ine depreciation will be used, and no residual value is expected. The committee has selected a rate of ion for purposes of the net revue analys Present Value of Si at Compound Interest Yes 69 10% 12% 159 2014 1 0.943 0.909 0.893 0.870 0.833 0.826 0.797 0.756 0.694 2 0.840 0.751 0.712 0.579 4 0.792 0.683 0.636 0.572 0.402 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 G.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0 280 0.104 10 0.558 0.385 0.247 0.162 Required ia. Compute the average rate of return for each investment. If required, round your answer to one decimal place. 6 9 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0 376 0.279 8 0.627 0.467 0.404 0.327 0.233 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average rate of Retum Front-End Loader 21 Greenhouse 21 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, round to the nearest dollar. It required, use the minus sign te ndicate a negative Front-End Loader Greenhouse 656,895 v Present value of net cash flow 621,560 Amount to be invested 450,000 400,000 Net present value 141,560 176,895 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments The front-end loader has a smaller net present value because cash flows occur later in time compared to the greenhouse. Thus, if only one of the two projects can be accepted, the greenhouse would be the more attractive Dex M 1. Divide the stad wage arust income by the average immert 15. For each stret, uy the present you tector for each year (Exht 2} by that year's net cash flow Sud e out to be ved from me prend Beret ces how we Table nel presente 2. Consider who cash food and the time value of money