Average Rate of Return Method, Net Present Value 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 cash flows from each investment are as follows: Front-End Loader Greenhouse Operating Net Cash Operating Net Cash Year Income Flow Income Flow 1 $52,500 $166,000 $110,000 $266,000 52,500 166,000 84,000. 224,000 52,500 166,000 42,000 158,000 4 52,500 166,000 18,000 108,000 5 52,500 166,000 8,500 74,000 Total $262,500 $830,000 $262,500 $830,000 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 15% for purposes of the net present value analysis. 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 . 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 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 0.567 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 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. Front-End Loader Greenhouse Average Rate of Return % 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 menus sign to indicate a negative net present value. Present value of net cash flow Amount to be invested Net present value Front-End Loader Greenhouse