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 income from operations and net cash flows from each investment are as follows: Front-End Loader Greenhouse Income from Net Cash Income from Net Cash Year Operations Flow Operations Flow 1 $53,200 $168,000 $112,000 $269,000 2 53,200 168,000 85,000 227,000 3 53,200 168,000 43,000 160,000 4 53,200 168,000 19,000 109,000 5 53,200 168,000 Total $266,000 $840,000 7,000 $266,000 75,000 $840,000 Each project requires an investment of $560,000. 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.