Average rate of return method, net present value method, and analysis for a service company

The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows:

Present Value of $$1$ at Compound Interest

Required:

$1$a$.$ Compute the average rate of return for each investment. If required, round your answer to one decimal place.

Average Rate of Return

Robotic Assembler

Warehouse

Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments.

The robotic assembler has a

net present value because cash flows occur

in time compared to the warehouse. Thus, if only one of the two projects can be accepted, the

would be the more attractive.