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Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering wo ovstmet

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Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering wo ovstmet The estimated income from operations and net cash flows from each investment ace as folowa Warehouse Tracking Technology Income from Year Net Cash Income from Net Cash Operations Flow Operations Flow $56,000 $172,000 $118,000 $275,000 56,000 172,000 90,000 232000 3 56,000 172,000 45,000 163,000 56,000 172,000 20,000 112000 56,000 172,000 7,000 78,000 $280,000 Total $860,000 $280,000 $860,000 Each project requires an investment of $560,000. Straight-line depreciation wil be used, and neresisai is expected. The committee has selected a rate of 15% for purposes of the net present waiue a0os Present Value of $1 at Compound Interest 20% 15% 12% 10% 6% Year 0.833 0.870 0.893 0.909 0.943 0.694 0.756 0.797 0.826 0.890 0.579 0.658 0.712 0.751 0.840 0.482 0.572 0.636 0.683 0.792 0.402 0.497 0.567 0.621 0.747 0.335 0.432 0.507 0.564 0.705 0.279 0.376 0.452 0.513 0.665 0.233 0.327 0.404 0.467 0.627 0.284 194 0.361 0.424 0.592 0.322 02470162 0.386 0.558 10 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 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 6 0.432 0.335 0.279 7 0.665 0.513 0.452 0.376 0.404 0.233 0.467 0.327 8 0.627 0.194 0.284 0.424 0.361 0.592 0.162 0.247 0.322 0.558 0.386 10 Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place Average Rate of Return Warehouse Tracking Technology 1b. 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 Warehouse Tracking Technology Present value of net cash flow total Less amount to be invested Net present value net present value as tracking technology cash flows occur 2 The warehouse has a in time. Thus, if only one of the two projects can be accepted, the would be the more attractive

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