The capital investment committee of Arches Landscaping Company is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Front-End Loader Greenhouse Net Cash Flow Net Cash Flow Year Operating Income $58,800 56,500 56,500 56,500 58,600 $294,000 Operating Income $123,000 94,000 47,000 21,000 9,000 $294,000 $190,000 190,000 190,000 190,000 190,000 $950,000 $304,000 257,000 181,000 124,000 34,000 $950,000 Tatal Each project requires an investment of $560,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes or the net present value analysis. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0 0.870 0.756 0.833 0.694 0.658 0.579 0.913 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.556 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 .893 0.797 0.712 0.536 0.567 0.507 0.452 0.404 0.361 0.322 7 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.482 0.402 0.335 0.279 0.233 0.194 0.162 9 10 Required: 1a. Compute the average rate of retum for each investment. If required, round your answer to one decimal place. Average Rate of Return Front-End Loader 21 % Greenhouse 21 % 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, round to the nearest dollar. If 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 repart for the capital investment committee, advising it on the relative merits of the two investments. The front-end loader has a smaller net present value because cash flows acour later in time compared to the greenhouse. Thus, if only one of the two prajects can be accepted, the greenhouse would be the more attractive