The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operat and net cash flows from each investment are as follows Warehouse Tracking Technology Income from Net Cash Income from Net Cash Year Operations Flow Operations Flow $58,000 58,000 58,000 58,000 58,000 $290,000 $176,000 176,000 176,000 176,000 176,000 $880,000 $122,000 93,000 46,000 20,000 9,000 $290,000 $282,000 238,000 167,000 114,000 79,000 $880,000 2 4 5 Total Each project requires an investment of $580,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis Present Value of $1 at Compound Interest Present Value of $1 at Compound Interest 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 2090 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 Year 6% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 2 3 4 6 8 10 Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average Rate of Return Warehouse Tracking Technology 0 1b. 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 Warehouse Tracking Technology Present value of net cash flow total Less amount to be invested Net present value The internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves an investment of $49,881 and annual net cash flows of $13,000 for each of the eight years of its useful life Present Value of an Annuity of $1 at Compound Interest 6% 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 Year 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 12% 0.893 1.690 2.402 3.037 3.605 15% 0.870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 2 3 4 6 4.564 4.968 5.328 5.650 8 10 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round your answer to three decimal places b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal