Average Rate or 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 rows from each investment are as follows: Front-End Loader Operating Net Cash Income Flow Year 1 560,000 60,000 $193,000 193,000 Greenhouse Operating Net Cash Income Flow $126,000 5309,000 96,000 261,000 48.000 183,000 21,000 125,000 9,000 87,000 2 60,000 50,000 193,000 193,000 193,000 60,000 Total $300,000 5965,000 $300,000 5965,000 Each project requires an investment of $600,000. Straight-ane depreciation will be used, and no residuetas expected. The committee has selected ante of 10 for purposes of the net present value analysis Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% Year 0.870 0.909 1 0.833 0.893 0.943 0.600 0.890 2 0.756 0.826 0.797 0.658 3 0.579 0.712 0.751 0.840 Previous 4 0.792 0.683 0.636 0.572 0.482 5 0.74% 0.621 0.497 0.402 0.567 0.507 6 0.705 0.564 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 B 0.622 0.404 0.327 0.167 0.424 0.233 0.194 9 0.592 0.361 0.284 10 0.558 0.386 0.322 0.242 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 16. Compute the net present value for each investment. Use the present value of $1 table above. It required, round to the nearest dollar. It required use the minus sign to indicate a negative net present value Front-End Loader Greenhouse Present value of net cash flow Amount to be invested Net present value 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two Investments, in time compared to the greenhouse The front-end loader has a net present value because cash flows occur Thus, it only one of the two projects can be accepted, the would be the more attractive