P8-1 (similar to) Question Help O Rate of return Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for two similar-risk investments, X and Y. Douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. A year earlier, investment X had a market value of $13,000; and investment Y had a market value of $42,000. During the year, investment X generated cash flow of $975 and investment Y generated cash flow of $4,834. The current market values of investments X and Y are $13,358 and $42,000, respectively. a. Calculate the expected rate of return on investments X and Y using the most recent year's data. b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why