Average Rate of Return Method, Net Presint Value Method, and Analysis for a Service Company The capital investment committee of Arches Landscaping Company 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 $75,000. Straight-line depreciation will be used, and no residual value is expected. The committee has seiected a rate of 12% for purposes of the net present value analysis. Each project requires an investment of 575,000 . 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. Required 1a. Compute the average rate of retum for each investment. If required, round your answer to one decimal place. 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, round to the nearest dollar. 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments: The front-end loader has a net present value because cash flows occur earlier in time compared to the greenhouse. Thus, if only one of the two projects can be accepted, the would be the more attroctive. Fectback Torek My wook 1a. Divide the estimated average annual income by the average investment. 16. For each investment, multiply the present value factor for each year (Exhibit 2) by that year's not cash flow. Subtract the amount to be imvested from the total present value of the net cash flow. Which imvestment oflors the more favorable net present value