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 Net Cash Income from Net Cash Year Operations Operations Flow 1 $45,000 $144,000 $95,000 $230,000 2 45,000 144,000 72,000 194,000 3 45,000 144,000 36,000 137,000 4 45,000 144,000 16,000 $4,000 45,000 144,000 6,000 65,000 Total $225,000 $720,000 $225,000 $720,000 Each project requires an investment of $500,000. 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 Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0,636 0.572 0.482 5 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 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.254 0.194 10 0.558 0.306 0.322 0.247 0.362 Required: 1a. Compute the average rate of return for each investment. 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 dollar. Warehouse Tracking Technology Present value of net cash flow total Less amount to be invested Net present value 1000 Cash Payback Period, Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Plant Retail Store Year Expansion 1 $147,000 Expansion $123,000 2 121,000 145,000 3 104,000 99,000 4 94,000 69,000 5 30,000 60,000 Total $496,000 $496,000 Each project requires an investment of $268,000. A rate of 15% has been selected for the net present value analysis. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 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 9 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 cash payback period for each product. Plant Expansion Retail Store Expansion Cash Payback Period 1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar. Present value of net cash flow total Less amount to be invested Net present value Plant Expansion Retail Store Expansion