Average Rate of Return The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $40,000 $88,000 Useful life 7 years 4 years 0 Estimated residual value Estimated total income over the useful life $6,400 $38,500 Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place. 3D Printer Truck The following data are accumulated by Geddes Company in evaluating the purchase of $107,900 of equipment, having a four-year useful life: Net Income Net Cash Flow Year 1 Year 2 Year 3 $30,000 $51,000 18,000 39,000 9,000 30,000 (1,000) 20,000 Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% Year 4 Year 0 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 .558 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 .893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 10 0 a. Assuming that the desired rate of return is 10%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, round to the nearest dollar. Present value of net cash flow Amount to be invested Net present value b. Would management be likely to look with favor on the proposal? , because the net present value indicates that the return on the proposal is than the minimum desired rate of return of 10%