A $400,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net cash flows are as follows:

Year	Net Income	Net Cash Flow
1	$ 75,000	$200,000
2	102,000	150,000
3	109,500	$90,000
4	36,000	80,000

The minimum desired rate of return for net present value analysis is 14%. Determine: (a) the average rate of return on investment, and (b) the net present value.

(a) the average rate of return on investment

(b) the net present value