The capital investment committee of Touch of Eden Landscaping Company is considering two capital investments. The estimated income from operations and net cash flows from each investment are as follows:

Each project requires an investment of $60,000. 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.
Instructions
1. Compute the following:
a. The average rate of return for each investment. Round to one decimal place.
b. The net present value for each investment. Use the present value of $1 table appearing in this chapter (Exhibit 2). Round present values to the nearest dollar.
2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments.

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Front-End Loader Greenhouse Fixtures Income fromNet Cash Income fromNet Cash Operations Flow Operations $10,200 10,200 10,200 10,200 Year Flow $23,000 35,000 32,000 24,000 10,000 20,000 12,000 (2,000) 2,000 10,000 10,200 22,200 22,200 22,200 22,200 200 111,000 4 51,000 111,000 $51,000