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 $25,000; and investment Y had a market value of $50,000. During the year, investment X generated cash flow of $1,875 and investment Y generated cash flow of $6,438. The current market values of investments X and Y are $26,250 and $50,000, respectively. a. Calculate the expected rate of return on investments X and Y using the most recent years data. b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why