P15-1 Average rate of return method, net present value method, and analysis The capital investment committee of Overnight Express Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Chapter 15 Capital Investment A Year Distribution Center Expansion Income from Net Cash Operations Flows $ 66,000 $ 226,000 66,000 226,000 66,000 226,000 66,000 226,000 66,000 226,000 $330,000 $1,130,000 Internet Tracking Technology Income from Net Cash Operations Flows $200,000 $360,000 90,000 250,000 30,000 190,000 10,000 170,000 160,000 $330,000 $1,130.000 Total Each project requires an investment of $800,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 15% for purposes of the net present value analysis. Instructions 1. Compute the following: a. The average rate of return for each investment. b. The net present value for each investment. Use the present value of $1 table appearing in this chapter. 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two projects