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 $15,000; and investment Y had a market value of $52,000. During the year, investment X generated cash flow of $1,125 and investment Y generated cash flow of $7,092. The current market values of investments X and Y are $15,737 and $52,000, 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? a. The expected rate of return on investment X is %. (Round to two decimal places.)