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:

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 $12\%$ for

purposes of the net present value analysis.

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

$\%$

$1$b$.$ Compute the net present value for each investment. Use the present value of $$1$ table above. If required, round to the nearest dollar. If required, use the minus sign to

indicate a negative net present value.