Average Rate of Return Method, Net Present Value Method, and analysis for a Service Company 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 Net Cash Flow $135,000 125,000 110,000 100,000 Net Cash Flow $108,000 108,000 108,000 108,000 108,000 $540,000 Income from Operations Income from Operations Year S 61,400 51,400 36,400 26,400 (3,600) $172,000 $ 34,400 34,400 34,400 34,400 34,400 $172,000 70,000 Total $540,000 Each project requires an investment of $368,000. 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. Present Value of $1 at Compound Interest 15% 0.943 0.909 0.893 0.870 0.890 0.826 0.797 0.756 0.840 0.751 0.712 0.658 0.792 0.683 0.636 0.572 0.7470.621 0.567 0.497 0.705 0.564 0.507 0.432 0.665 0.513 0.452 0.376 0.6270.467 0.4040.327 0.592 0.424 0.361 0.284 0.558 0.386 0.322 0.247 6% 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 Year 10% 12% 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. If required, round to the nearest dolla Warehouse Tracking Technology Present value of net cash flow total Amount to be invested Net present value 2. The net present value exceeds the selected rate established for discounted cash flows (15%), while the does not. Thus, considering only quantitative factors, the investment should be selected