Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Overnight Express Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Distribution Center Expansion Internet Tracking Technology Income from Net Income from Net Year Operations $56,000 56,000 56,000 56,000 56,000 Cash Flow Operations Cash Flow $171,000 171,000 171,000 171,000 171,000 $855,000 $274,000 231,000 162,000 111,000 77,000 $855,000 $118,000 90,000 45,000 20,000 7,000 2 4 $280,000 $280,000 Total Present Value of $1 at Compound Interest 696 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 20% Year 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 1596 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 3 8 10 Each project requires an investment of $560,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 15% for purposes of the net present value analysis Required: 1a. Compute the average rate of return for each investment. Round to one decimal place. Average Annual Rate of Return Distribution Center Expansion Internet Tracking Technology 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value Distribution Center Expansion Internet Tracking Technology Present value of net cash flow total Amount to be invested Net present value