Average Raste 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 nows from each investment are as follows: Distribution Center Expansion Internet Tracking Technology Income from Net Income from Net Year Operations Cash Flow Operations Cash Flow 1 $75,000 $120,000 $24,700 24,700 2 75,000 $52,000 40,000 20,000 101,000 3 24,700 75,000 71,000 4 24,700 75,000 49,000 9,000 2,500 24,700 75,000 34,000 Total $123,500 $375,000 $123,500 $375,000 Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% Year 1 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 Check My Work 10 mare Check My Work uses remaining Previous Next > 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 0.522 0,452 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.502 0.432 0.335 7 0.665 0.513 0.452 0.326 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 01284 0.194 10 0.558 0.386 0.322 0.247 0.162 Each project requires an investment of $380,000. 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. Round to one decimal place. Check My Work 10 more Check My Work uses remaining Previous Next > Next Each project requires an investment of $380,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected rate of 12% for purposes of the net present value analysis. Required: 1a. Compute the average rate of return for each investment. Round to one decimal place. Average Rate of Return Distribution Center Expansion Internet Tracking Technology % Ib. Compute the net present value for each investment. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value. Distribution Center Expansion Internet Tracking Technology Total present value of net cash flow Amount to be invested Net present value 2. The distribution center expansion offers average annual rate of retum compared to the internet tracking technology. The net present value exceeds the selected rate established for discounted cash flows (12%), while the does not Thus, considering only quantitative factors, the investment should be selected