Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows Warehouse Tracking Technology Income from Income from Net Cash Net Cash Year Flow Operations Flow Operations $195,000 195,000 195,000 195,000 195,000 $975,000 $312,000 263,000 185,000 127,000 88,000 $975,000 $62,000 62,000 62,000 62,000 62,000 $310,000 $130,000 99,000 50,000 22,000 9,000 $310,000 2 4 Total Each project requires an investment of $620,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis Each project requires an investment of $620,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis Present Value of $1 at Compound Interest 20% 0.833 0.890 0.826 0.7970.756 0.694 0.579 0.482 0.567 0.497 0.402 0.335 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.4040.327 0.233 0.194 0.558 0.386 0.322 0.247 0.162 10% 15% Year 696 1296 0.943 0.909 0.893 0.870 2 0.840 0.751 0.792 0.683 0.636 0.572 0.747 0.621 0.705 0.564 0.507 0.432 0.712 0.658 4 0.284 0.592 0.424 0.361 10 Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place Average Rate of Return Warehouse 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 Tracking Technology Warehouse Present value of net cash flow total Less amount to be invested Net present value 2. The warehouse has a only one of the two projects can be accepted, the net present value as tracking technology cash flows occur in time. Thus, if would be the more attractive