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 Income from Year Operations Tracking Technology Income from Net Cash Flow Net Cash Operations Flow $45,600 $144,000 $96,000 $230,000 2 45,600 144,000 73,000 194,000 3 45,600 144,000 36,000 137,000 4 45,600 144,000 16,000 94,000 5 45,600 144,000 Total $220,000 $720,000 7,000 $220,000 65,000 $720,000 Each project requires an investment of $400,000. 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 Interesti Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.093 0.870 0.033 2 0.090 0.026 0,797 0.756 0.694 3 0.040) 0.751 0.712 0.650 0.579 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 average rate of return for each investment. Warehouse Average Rate of Return 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. Present value of net cash flow total Less amount to be invested Net present value 2. The warehouse has a Warehouse Tracking Technology net present value as tracking technology cash flows occur) in time. Thus, if only one of the two projects can be accepted, the would be the more attractive.