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 $50,400 $164,000 $106,000 $262.000 2 50,400 164,000 81,000 221,000 3 50,400 164,000 40,000 156,000 4 50,400 164,000 18,000 107,000 5 50,400 164,000 7,000 74,000 Total $257,000 $820,000 $252,000 $820,000 Each project requires an investment of $480,000. 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 0.670 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 0.792 0,683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 1 0.943 0.870 0.833 2 0.890 0.909 0.826 0.751 0.893 0.797 0.712 0.756 0.694 3 0.8.10 0.658 0.579 4 0.792 0.683 0.482 0.636 0.567 0.572 0.497 5 0.747 0.402 0.621 0.564 6 0.705 0.507 0.335 7 0.665 0.432 0.376 0.513 0.279 0.452 0.404 B 0.467 0.327 0.627 0.592 0.558 0.233 0.194 9 0.424 0.361 0.322 0.284 0.247 10 0.386 0.162 Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average Rate of Return Front-End Loader Greenhouse 9. 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 minus sign indicate a negative net present value. Front-End Loader Greenhouse Present value of net cash flow Amount to be invested Net present value