Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Average rate of Return Method, Net Prentvo Method, and Analysis for a service company The capital investment committee of Arches Landscaping Company is considering two
"Average rate of Return Method, Net Prentvo Method, and Analysis for a service company The capital investment committee of Arches Landscaping Company is considering two capital investments. The estimated operating income and net cast tows from each investment are as follows: Front-End Loader Greenhouse Operating Net Cash Operating Year Income Flow Income Net Cash Flow 1 $60,000 2 3 $193,000 193,000 193,000 193,000 493,000 3965,000 $126,000 96,000 43,000 21,000 50,000 60,000 60,000 60,000 3300,000 5309,000 261,000 183,000 125.000 07.000 5965,000 4 5 9,000 $300,000 Total Each project requires an investment of 5000,000. Stratte depreciation will be used and is expected. The committee has the of 1 for purposes of the reply Year 1 Present Value of si at Compound Interest 6% 10% 129 159 2018 0.943 0.009 0.0193 0670 003 0.890 0.826 0.797 0.694 0.840 0751 0.712 250 10:57 2 > audia Mercado - YouTube + assignment/takeAssignment Main doinvoker=&takeAssignmentSessionLocator -&inprogress-false Print Item Present Value of $1 at Compound Interest 6% 10% 12% 20% Year 15% 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 0.56% 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0,513 0.452 0.376 0.279 0.233 8 0.467 0.404 0.327 9 0.627 0.592 0,558 0.424 0.361 0.284 0.194 10 0.386 0.322 0.247 0.162 Required: 1a. Compute the average rate or return for each investment If required, round your answer to one decimal place, Average Rate of Return Front-End Loader Greenhouse 1b. Compute the tet present Valoo for at investment. Use the present a table to IT required, round to the nearest dollar que use the minus sign to indicate a negative not present value Front-End Londer Greenhouse Print item 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 Front-End Loader Greenhouse 90 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 negative net present values Front-End Loader Greenhouse 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 front and loader has a met present you because cash cows occur me compared to the ground Thus, only one of the two projects can be accepted the would be the more attract
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started