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 Year Operations Net Cash Flow Income from Net Cash Operations Flow 1 $60,900 $199,000 $128,000 $318,000 2 60,900 199,000 97,000 269,000 3 60,900 199,000 49,000 189,000 4 60,900 199,000 21,000 129,000 5 60,900 199,000 9,500 90,000 Total $304,500 $995,000 $304,500 $995,000 Each project requires an investment of $580,000. 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.