Average Rate of Return Method, Net Present Value Method, and Analysis for a service company The capital investment committee of Arches Landscaping Company is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Front-End Loader Greenhouse Operating Income Net Cash Flow Operating Income Net Cash Flow Year u WN $41,800 41,800 41,800 41,800 41,800 $127,000 127,000 127,000 127,000 127,000 $88,000 67,000 33,000 15,000 6,000 $203,000 171,000 121,000 83,000 57,000 $635,000 Total $209,000 $635,000 $209,000 Each project requires an investment of $380,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis. Present Value of $1 at Compound Interest Year 1 2 3 6% 0.943 .890 0.840 10% 0.909 0.826 0.751 12% 0.893 0.797 0.712 15% 0.870 0.756 0.658 20% 0.833 0.694 0.579 0 Each project requires an investment of $380,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.833 0.943 0.890 0.840 0.909 0.826 0.893 0.797 0.756 0.694 0.658 0.579 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.712 0.636 0.567 0.507 0.452 0.572 0.497 0.432 0.376 0.327 0.482 0.402 0.335 0.279 0.233 0.194 0.162 8 0.404 0.361 0.322 10 0.284 0.247 Required: la. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average Rate of Return Front-End Loader Greenhouse Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average Rate of Return Front-End Loader Greenhouse 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Front-End Loader Greenhouse Present value of net cash flow Amount to be inwested Net present value 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 rows occur inter two projects can be accepted, the greenhouse would be the more attractive in time compared to the greenhouse. Thus, if only one of the