PR 12-1A Average rate of retum method, net present value method, and analysis for a service company The capital investment committee of Iguana Inc. is considering two capital investments. The esth mated operating income and net cash flows from each investment are as follows: Each project requires an investment of $150,000. 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. 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 table appearing in Exhibit 2 of this chapter. Round present values to the nearest dollar. 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments