1:21PM Wed Mar 20 Done Scotts Ch 24 homework AA eBook v2.cengagenow.com Show Me How Print Item 45% 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: ? Robotic Assembler Robotic Assembler Year Operating Income Net Cash Flow Warehouse Operating Income Warehouse Net Cash Flow 1 $50,400 $158,000 $106,000 $253,000 2 50,400 158,000 81,000 213,000 3 50,400 158,000 40,000 150,000 4 50,400 158,000 18,000 103,000 5 50,400 158,000 7,000 71,000 > Total $252,000 $790,000 $252,000 $790,000 Each project requires an investment of $480,000. 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. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 Check My Work Assignment Score: 81.82% Previous All work saved. Save and Exit Submit Assignment for Grading 1:22 PM Wed Mar 20 Done AA v2.cengagenow.com Scotts Ch 24 homework eBook Show Me How Print Item 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1a. 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 21 % 21 % 1b. 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. Robotic Assembler Warehouse Present value of net cash flow $ $ Amount to be invested Net present value $ 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments. The robotic assembler has a smaller can be accepted, the warehouse net present value because cash flows occur later in time compared to the warehouse. Thus, if only one of the two projects would be the more attractive. Check My Work Assignment Score: 81.82% Previous 45% All work saved. Save and Exit Submit Assignment for Grading ?