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Average rate of return method, net present value method, and analysis for a service company Each project requires an investment of $ 5 8 0
Average rate of return method, net present value method, and analysis for a service company Each project requires an investment of $ Straightline depreciation will be used, and no residual value is expected. The committee has selected a rate of for
purposes of the net present value analysis.
Required:
a Compute the average rate of return for each investment. If required, round your answer to one decimal place.
Average Rate of Return b Compute the net present value for each investment. Use the present value of $ table above. If required, round to the nearest dollar. If required, use the minus
sign to indicate a negative net present value.
Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments.
The robotic assembler has a
net present value because cash flows occur
in time compared to the warehouse. Thus, if only
one of the two projects can be accepted, the
would be the more attractive.
The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as
follows:
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