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 Income from Operations Year Net Cash Flow Tracking Technology Income from Net Cash Operations Flow $37,800 $118,000 $79,000 $189,000 37,800 118,000 60,000 159,000 37,800 118,000 30,000 112,000 37,800 13,000 77,000 118,000 118,000 37,800 7,000 53,000 Total $189,000 $590,000 $189,000 $590,000 Each project requires an investment of $360,000. 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% 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.233 0.592 0.424 0.361 0.284 0.194 100 .558 0.386 0.322 0.247 0.162 0.327 Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average Rate of Return % Warehouse Tracking Technology 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value. Warehouse Tracking Technology Present value of net cash flow total Less amount to be invested Net present value 2. The warehouse has a net present value as tracking technology cash flows occur in time. Thus, if only one of the two projects can be accepted, the would be the more attractive