The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows:

Average Rate of Return Method, Net Present Value Method, and Analysis The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Year Operations 1 2 3 4 5 Total Warehouse $63,000 63,000 63,000 63,000 63,000 $315,000 Flow $190,000 190,000 190,000 190,000 190,000 $950,000 Tracking Technology Income from Net Cash Income from Net Cash Operations $132,000 $315,000 101,000 50,000 22,000 10,000 Flow $304,000 257,000 181,000 124,000 84,000 $950,000 Each project requires an investment of $600,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis. Present Value of $1 at Compound Interest Year I... IOWHIO'IU'IAWN I.- D 6% 10% 12% 0.943 0.909 0.893 0.890 0.826 0.797 0.840 0.751 0.712 0.792 0.683 0.636 0.747 0.621 0.567 0.705 0.564 0.507 0.665 0.513 0.452 0.627 0.467 0.404 0.592 0.424 0.361 0.558 0.386 0.322 Required: 1a. Compute the average rate of return for each investment. Warehouse Tracking Technology Average Rate of Return 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 % % 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 1I1. 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. If required, round to the nearest dollar. warehouse Tracking Technology Present value of net cash ow total Less amount to be invested Net present value s $ $ $ $ $ hnpsvZ .ccrigagc mmnihn'mkessignmcntakcAssignmcnm'lajn .do?invol:c HtskcAssigmntScssjonlmcatminpmgrcss-falsc HZ TIMOZI 2. The warehouse has a net present value as tracking technology cash ows occur Thus, if only one of the two projects can be accepted, the would be the more attractive. in time