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 ea- investment are as follows: Tracking Technology Warehouse Income from Year Operations Net Cash Flow Income from Net Cash Operations Flow 1 $44,000 $144,000 $92,000 $230,000 2 44,000 144,000 70,000 194,000 3 44,000 144,000 35,000 137,000 4 44,000 144,000 15,000 94,000 44,000 144,000 Total $220,000 $720,000 8,000 $220,000 65,000 $720,000 Each project requires an investment of $400,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% 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 0.090 0.026 0.797 0.756 0.494 0.840 0.751 0.712 0.658 0.579 Check My Work Next>