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 Flow Operations Flow 1 $43,700 $133,000 $92,000 $213,000 2 43,700 133,000 70,000 180,000 3 43,700 133,000 35,000 126,000 4 43,700 133,000 15,000 66,000 5 43,700 133,000 6,500 Total $218,500 $665,000 $218,500 60,000 $665,000 Each project requires an investment of $460,000. 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. Each project requires an investment of $460,000. 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% 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 S 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: Required: 1a. Compute the average rate of return for each investment. Warehouse Tracking Technology Average Rate of Return % % 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 2. The warehouse has al projects can be accepted, the net present value as tracking technology cash flows occur would be the more attractive. in time. Thus, if only one of the two