Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Income from Net Cash Income from Net Cash Year Operations Flow Operations Flow $50,000 50,000 50,000 50,000 50,000 $250,000 $161,000 161,000 161,000 161,000 161,000 $805,000 $105,000 80,000 40,000 18,000 7,000 $250,000 $258,000 217,000 153,000 105,000 72,000 $805,000 Total Each project requires an investment of $500,000. 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. Present Value of $1 at Compound Interest Year 1290 0.893 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.5720.482 0.7470.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 0.404 0.592 0.424 0.361 0.284 0.194 6%% 10% 15% 20% 0.943 0.909 0.870 0.833 0.627 0.467 0.327 0.233