Look at the photo 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:

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 $15\%$

for purposes of the net present value analysis.

Present Value of $$1$ at Compound Interest

$1$a$.$ 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

$\%$

$1$b$.$ 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.

Front$-$End Loader Greenhouse

Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments.

The front$-$end loader has a

net present value because cash flows occur

in time compared to the greenhouse. Thus, if only one

of the two projects can be accepted, the

would be the more attractive.